CELEX: 51989PC0266(01)
Language: en
Date: 1989-08-03
Title: PROPOSAL FOR A COUNCIL REGULATION ESTABLISHING A COMMUNITY SHIP REGISTER AND PROVIDING FOR THE FLYING OF THE COMMUNITY FLAG BY SEA-GOING VESSELS

COMMISSION OF THE EUROPEAN COMMUNITIES
                                                   COH (89) 266 final
                                                   Brussels, 3 August 1989
   111
  ^'"
              A FUTURE FOR THE COMMUNITY SHIPPING INDUSTRY:
                         MEASURES TO IMPROVE THE
m              OPERATING CONDITIONS OF COMMUNITY SHIPPING
•M
v»3K
^38
 ---pagebreak---  A FUTURE FOR THE COMMUNITY SHIPPING INDUSTRY:
            MEASURES TO IMPROVE THE
   OPERATING CONDITIONS OF COMMUNITY SHIPPING
(Communication by the Commission to the Council)
 ---pagebreak---            A FUTURE FOR THE COMMUNITY SHIPPING INDUSTRY:
                        MEASURES TO IMPROVE
          THE OPERATING CONDITIONS OF COMMUNITY SHIPPING
                         TABLE OF CONTENTS
I.   Introduction
II.  The situation of the shipping industry
     1. Changes in world and Community shipping
         (a) Reduced demand for world shipping services
         (b) Fleet developments and the decline of the Community
         fleet
         (c) Relative ageing of the Community fleet
         (d) Shrinkage in employment
     2. The competitive disadvantage of the Community fleet
     3. Measures taken by Member States
III. The need and scope for Community action
     1. Need for a Community fleet
     2. The scope for Community action
IV.  A Community ship register as a measure to stem the decline of
     the Community fleet.
V.   Areas for further action and accompanying measures
     1.  Manning and research
     2.  Technical harmonization and standardization and the
         transfer of ships between Community countries.
     3.  Social measures
     4.  Ensuring the observation of International IMO/ILO standards
     5.  Promotion of the use of Community flag shipping for
         transport of food aid
     6.  Definition of a Community shipowner
     7.  The removal of cabotage restrictions
     8.  Consortia
     9.  VAT and excise duties related to shipping services.
 ---pagebreak--- ANNEX 1 Proposai for a Council Regulation establishing a Community ship
        register and providing for the flying of the Community flag by
        sea-going vessels
ANNEX 2 Commission Recommendation on improving the effectiveness of
        Port State Control within the Community
ANNEX 3 Proposal for a Council Regulation on a common definition of a
        Community shipowner
ANNEX 4 Proposal for a Council Regulation applying the principle of
        freedom to provide services to maritime transport within Member
        States
ANNEX 5 Manning costs
ANNEX 6 Statistical Annex
 ---pagebreak---              A FUTURE FOR THE COMMUNITY SHIPPING INDUSTRY:
                          MEASURES TO IMPROVE THE
               OPERATING CONDITIONS OF COMMUNITY SHIPPING
I. INTRODUCTION
1.  The Community merchant fleet on the ship registers of Member States
    has suffered since 1980 a dramatic decline both in absolute tonnage
    and in its share of the world fleet. The tonnage was practically
    halved between 1980 and 1988< 1 ) . The share of the world fleet
    fell during the decade from 1970 to 1980 by about 3% to 29,7% but
    this share had declined by 1988 to 15,4%.
    Even if account is taken also of vessels registered outside the
    Community but controlled by Community based companies, there is the
    same tendency. While the world fleet as a whole declined only
    marginally (about 5%), the Community-owned fleet was 28.3% down in
    1987 - last year for which relevant figures are available - in
    comparison with 1981.
    The situation of the Community fleet has continued to deteriorate
    since the Commission Communication to the Council transmitted on 19
    March 1985< 2 ) . Sale of ships and flagging out has become an ever
    more serious problem, with negative consequences for the employment
    of Community seafarers. In addition, significant developments have
    taken place in international shipping In respect of ship
    registration. In particular there has been the development of
    "offshore" or "second" registers and moves to extend the use of
    parallel registers. Given the present circumstances of world
    shipping such options have proved increasingly popular to Community
    shipowners in preference to the traditional main registers of
    Member States. This development presents the danger of an
    increasing divergence in operating conditions between Member
    States' fleets and distortion of conditions of competition between
    Community shipowners.
2.  If the downward trend Is not to continue there is a need for
    substantial measures which go beyond those taken on the basis of
    proposals in the Communication and earlier.
    Following the adoption of the package of four Regulations in
    December 1986<3>, which focused in particular on the threat to
    Community shipping from protectionist policies and practices of
    third countries, there is a clear need for further development of
    Community policy to meet the problems relating to the erosion of
    the competitive advantage of Member States' fleets In the world
    market.
(1) See Statistical Annex, Table 1
(2) C0M(85)90 final
(3) OJ L 378, 31.12.86
 ---pagebreak---                                 - ? -
   When adopting the four Regulations, the Council therefore agreed on
   a "Statement" relating to the further development of Community
   shipping policy. In that Statement, the Council recognised the need
   for further measures which precisely would aim to maintain and
   develop an efficient and competitive Community shipping industry
   and to secure competitive sea transport services In the interest of
   Community trade. To this effect efforts are needed to reduce the
   disparities in operating conditions and costs between the Community
   fleets as a whole and their foreign competitors. The Commission
   undertook to come forward with relevant proposals to the Council
   and this is the subject of the present Communication.
3. The Commission is convinced that only a combination of concerted
   measures, taken at Community and national level with the necessary
   participation and co-operation of shipowners and seafarers can have
   the required positive impact on the operating conditions of
   Community shipping. This impact must provide sufficient incentive
   for Community shipowners to register their ships within the
   Community and man those ships, to the highest possible proportion,
   with Community seafarers. Such objectives can be achieved only if
   the operating conditions of the Community fleet improve its
   competitive position in the world market.
4. Having considered possible measures that could be taken at
   Community level, the Commission has concluded that one effective
   means of assisting the Community fleet to make the necessary
   adjustments in the face of its present difficulties would be the
   establishment of a Community register, parallel to existing
   national registers. Such a register could contribute to the
   achievement of the single internal market in the Community, and
   would bring other advantages which are discussed in Chapter IV
   below. A proposal for a Council Regulation to establish a Community
   ship register is attached at Annex 1.
5.  In addition, the Commission is proposing a number of further
   measures, and areas for further work, which have as their objective
   the improvement of the competitive position of the Community fleet.
   Thus, the Commission's research programme includes work aimed at
   achieving greater technical efficiency in order to consolidate the
   fleet's long term future, by, in particular, putting Community ship
   operators in a competitive position allowing them to accept the
   higher costs of Community seafarers. Measures to achieve mutual
   recognition of technical equipment, thus facilitating the transfer
   of ships between Community countries are being pursued. Similarly,
   proposed social measures include a proposal for mutual recognition
   of seafarers' qualifications. Measures are also to be taken to
   ensure as far as possible that third country flag ships coming to
   Community ports operate in full observance of internationally
   applicable safety, environment and employment standards, as laid
   down In the relevant IMO and ILO Conventions; a Commission
   Recommendation Is at Annex 2. The use of Community flag shipping
   for the transport of food aid will be promoted. Community shipping
   companies will be defined, in order to ensure that the rights and
   benefits attached to shipping in the Community are available only
 ---pagebreak---                                   - 3 -
    to companies with a substantial presence in the Community: a
    proposal for a Regulation is at Annex 3. there is also a proposal
    for the application to sea transport within Member States of the
    principle of freedom to provide services: a proposal for a
    Regulation, which supersedes the earlier proposal of the Commission
    in COM(85)90, Annex 11-2, is attached at Annex 4. It is also
    necessary that the position of shipping consortia in relation to
    the competition rules of the Treaty should be clarified; the
    Commission will submit a proposal to the Council on the subject as
    soon as possible. And finally, the treatment of shipping for VAT
    and certain excise purposes is to be clarified.
6.  The Commission has come to the conclusion, corroborated by three
    studies carried out for the Commission* 1 )* 2 )* 3 ), that, among the
    range of possible measures and actions, fiscal and financial
    measures aimed at reducing the burdens on Community shipping not
    shared by third country competitors could also have an impact. But
    such measures, If Introduced by Member States separately and
    outside a common framework, may not achieve their objectives and
    may well lend to a further divergence of operating conditions
    between Member States' fleets and a distortion of competition
    between Community shipowners.
7.  Such fiscal and financial measures, as well as any other state
    aids, have to comply with the relevant rules of the Treaty, and the
    Commission has adopted guidelines for the examination by it of
    state aids to the shipping industry, contained in a Commission
    document on the subject* 4 ).
8.  The Commission Is confident that, taken together, this substantial
    list of proposed measures offers the Community fleet a new future
    in line with the development of the single market.
II. THE SITUATION OF THE SHIPPING INDUSTRY
    (1) CHANGES IN WORLD AND COMMUNITY SHIPPING
9.  The protracted oversupply of shipping services world-wide, and the
    consequent fall in freight rates, have precipitated a serious
    decline of the Community's merchant fleet. Despite the reduction in
    world shipping capacity that has taken place during the Eighties,
    and despite the upturn in seaborne trade over the last two years,
    the world shipping market is only now reaching a balance, and in
    some sectors this point has not yet been reached. Over a prolonged
    period markets have been characterised by freight rates that were
    so low that only those ships with the highest levels of
    productivity could compete effectively.
(1) "A social survey In Maritime Transport" by Maritime Economic
Research Centre Rotterdam - 1987.
(2) "Study of the Possible Financial Impact on Shipping Companies and
Sailors of Measures to aid the Community Fleet" by KPMG Peat Marwick
Treuhand GmbH - 1988 (unpublished)
(3) "EEC Maritime Industries Policy Study" by Moore Stephens - 1989
(4) "Financial and Fiscal Measures concerning Shipping Operations with
    ships registered In the Community", SEC(89)921
 ---pagebreak---                                   - 4 -
10. The increased competition has had serious consequences for the
    Community fleet, which has contracted rapidly. The Community fleet
    shrank almost four times as fast as world capacity in the first
    part of the Eighties, or almost one-and-a-half times as fast as
    world shipping demand. The consequences of this rapid contraction
    are measured in terms of increased dependence on the services of
    third country operators, lost foreign exchange earnings, lost
    employment, lost Influence in International trade and shipping
    negotiations and lost orders for Community shipyards.
11. The following paragraphs present a more detailed analysis of this
    dec 11 ne.
    (a) Reduced demand for world shipping services
12. Cargo movements by sea in 1988, measured by tonne-miles, were still
    9% below the 1980 level, following a disastrous fall by 24% between
    1980 and 1983. This drop represents not only a fall in the total
    volume of seaborne trade but, more significantly, a fall in the
    distances which this trade is carried. The trend varies for the
    different categories of cargo: broadly speaking, crude oil
    movements are down 38%, while those of oil products are up by
    almost one third, movements of other major bulk commodities have
    grown by 28% - most of the expansion being in coal trades - and
    the movement of other cargoes has expanded by 9% (Table 2 ) .
13. Irreversible changes have been taking place in the relationship
    between the level of economic activity and that of seaborne trade.
    Firstly, the upturn which the world economy has experienced during
    the last few years has not been accompanied by an equivalent
     increase in seaborne cargo volumes. This is explicable in terms of
    structural changes In the world economy: slower growth in demand
    for primary commodities, increased economic importance for the
    service sector.
14. Secondly, changes in trade patterns are leading seaborne transport
    to and from Industrialised countries to grow more slowly than the
    expanding world economy. Examples of these changes are the decrease
    of the average voyage distance for some of the main bulk
    commodities, notably oil, as newer production areas become
     important; and the establishment of manufacturing and processing
    facilities In newly-industrialised countries so that trade between
    the EC and those countries tends towards lower-volume, higher-value
    goods than in the past. The Importance of the Pacific Basin, and
    particularly of South and East Asia, as a focus of world economic
    activity has increased sharply during the past decade and as a
    consequence the role of the European economies as a generator of
    cargoes has become relatively less important. These developments
    have an Inevitable effect on the demand for shipping services
    generated by the Community.
15. While world seaborne trade (or the demand for shipping services)
    fell between 1980 and 1988 by 9%, the capacity of the world fleet
    (or the supply of shipping services) fell by only 5% (Table 1 ) .
 ---pagebreak---                                    - 5" _
    Excess shipping capacity was still estimated to be about 20% a year
    ago in spite of the slight upturn since 1986 in crude oil trade and
    further reductions In the world fleet. More recently developments
    have confirmed the improvement of the world market towards a
    balance between the supply and demand to shipping services although
    In some sectors, in particular certain liner trades, considerable
    overcapacity persists.
16. While it Is estimated that the recent recovery in the level of
    seaborne trade will continue with improved freight rates, it needs
    to be borne in mind that the existing beneficial effects can be
    short-lived as new tonnage Is acquired to take advantage of
     Improving markets.
    (b) Fleet developments and the decline of the Community fleet
17. After years of expansion, the Community's shipping capacity
    contracted sharply in the Eighties. The Community fleet Is now
    smaller than In 1980 and is also a smaller part of the world fleet.
18. Since 1980 the tonnage registered in the   eleven maritime Member
    States has fallen from 117 million gross   tons to 59 million tons in
    1988 - a decrease of about 50% while the   number of ships fell from
    11 218 to 6 512 (Table 3 ) . As a share of the world fleet,
    Community-registered tonnage In 1988 was   15.4%, compared with more
    than 29,7% in 1980.
19. To a large extent the reduction has been the result of "flagging
    out" by shipowners. However, the Community-owned fleet as a whole,
    i.e. including also the ships beneficially owned by Community
    shipowners, has also been significantly reduced.
    In 1981, this Community-owned fleet accounted   for more than 34% of
    world shipping capacity; in 1987, it was 27%.   While world shipping
    capacity, measured by deadweight tonnes, fell   by 8% between 1981
    and 1987, Community-owned capacity dropped by   28% (Table 4 ) .
20. The decline of the different sectors of the Community fleet has not
    run parallel with the evolution of those sectors worldwide.
    Moreover, It has not been evenly experienced across the Member
    States' fleets (Table 6 ) .
         In the six years 1981-1987, the capacity of the Community-owned
         tanker fleet fell by 40%, the same as the fall In world demand
         for crude oil capacity. Another third of the fleet only
         remained competitive by being transferred to open registries so
         that the Community-registered fleet declined twice as fast as
         the world fleet, with a fall of 54%. The effects were greatest
         In the UK, the Federal Republic, France and the Netherlands.
         In the dry bulk sector. Community-owned capacity dropped over
         the same period by 13% while world capacity grew by 16%. Again,
         competitiveness for a large part of the fleet could only be
         maintained by transferring It to open registries: about 40% of
         the Community-owned fleet was flagged out In this way. The
         effects were most severe in the UK and the Federal Republic.
 ---pagebreak---                                   - 6 -
        Community-owned non-bulk capacity in 1987 was nearly 20% below
        the 1981 level with a 36% drop in the Community-registered
        share. However, this conceals sharp differences according to
        vessel types. The Community's conventional general cargo fleet
        has declined much faster than the world's fleet, with most of
        the loss occurring In the Greek fleet. The decline of this
        sector was to be expected with the advent of container!sat ion,
        and indeed the container sector has expanded, with recent
        growth taking place In the Federal Republic and Denmark. The
        expansion has not, though, been sufficient to enable the ..
        Community to maintain its world share in this expanding part of
        the shipping market: it stood at 28% in 1987, against 36% as
        recently as 1983. Over the same period, the world share of the
        open-registry container fleets had doubled. There were sharp
         increases too in the Far East container fleets (Table 7 ) . There
        are signs that overcapacity in the containerised sector will
        Increase, particularly in the Trans-atlantlc and Transpacific
        trades.
21. Each of the Member States' fleets is smaller now than it was in
    1980, with the exception of Belgium whose fleet continued to grow
    until 1986. The largest tonnage falls have been In the Greek- and
    UK-reglstered fleets, which together account for two-thirds of the
    decline in the Community-registered fleet. The crisis In Greek
    shipping led to a doubling of Greek-owned ships on open registries
  ' between 1981 and 1987, but total Greek-owned capacity still fell by
    some 8% (Table 8 ) .
22. While most OECD fleets have declined over the last decade, the
    United States fleet has increased by a third. Nonetheless, the OECD
    share of world shipping in 1988 stood at 34% compared with 53% in
    1980. The rate of expansion of the COMECON fleet in the 1970s has
    not been sustained in the 1980s, and its world share is now 7%. The
    fleets of the developing countries have increased by 60% in the
    Eighties and now represent just over 20% of world shipping. The
    growth has been heavily biased towards South and East Asia, where
    four newly industrialised countries (Rep. of China, Hong Kong,
    Singapore and South Korea) had 6.8% of world shipping capacity in
    1988 (from 3.9% In 1980).
23. The tendency for the fleets of developing countries to provide
    sharp competition to the Community fleet highlights one aspect of
    present Community policy with respect to shipbuilding. Present
    policy places a celling on the amount of national aid that may be
    accorded to a Community shipyard building a ship for registration
    In the Community. These rules may be relaxed for ships for
    developing countries, with the result that a Member State was
    recently allowed to pay bigger aids for two container ships for
    Singapore than could have been paid for container ships for the
    Community fleet. The Commission has now Introduced a stricter
    interpretation of the rules concerning shipbuilding aid for
    developing countries.
 ---pagebreak---                                  - 7-
24. The open registry fleets' share of world shipping has grown from
    27% to 35%, but this conceals some sharp changes. The LIberian
    fleet is now a third smaller than it was in 1980, the Panamanian
    fleet is twice as large and the Cypriot fleet is eight times
    larger. In the recent years, the newer open registries, such as
    Vanuatu, St. Vincent and Antigua, have grown sharply and have
    Intensified the competition between open registries to attract
    shipowners.
25. However, the most remarkable feature of recent years has been the
    growth of "offshore" or "international" registries. These registers
    differ from open registries in that ships operating on the former
    fly the flag of the country concerned.**) By June 1988, the
    Norwegian International Registry had attracted 241 ships of 12.2
    million tonnes deadweight within a year of Its establishment. Most
    of these were transfers from the main Norwegian registry but an
    estimated 40% were repatriated from other flags. By the end of
    1987, the Isle of Man, one of the UK's second registries, had
    attracted 112 ships of 2.3 million gross tons and there was more
    tanker tonnage registered In the Isle of Man than in the UK itself.
    The Bermudan registry expanded too, to stand at 3.7 million gross
    tons at mid-1988, reflecting in part the flagging-ln of tankers in
    order to gain Royal Navy protection in the Gulf. Within days of
    opening in August 1988, the Danish International Register had
    attracted a large part of the fleet from the main Danish registry.
    (c) Relative ageing of the Community fleet
26. However, apart from the case of the Federal Republic and Denmark,
    the reduction of older tonnage through flagging out as well as
    increased scrapping has not been accompanied by a modernisation of
    the Community's fleet. The Community-registered fleet is now older
    than most of its competitors (Table 8 ) . There are, of course,
    variations between member States reflecting, inter alia, the
    different compositions of their fleets. Thus, over 70% of ships
    registered in the Federal Republic are less than 10 years old and
    in Denmark 45% but in the UK and Spain it is 34%, in France and
    Greece 27% and Italy 17%. For the Community as a whole, the average
    Is 34%, compared with an OECD average of 40%, 39% for COMECON and
    30% for open registers. In the rapidly growing fleets of Hong Kong
    and Taiwan, half the tonnage Is under ten years old.
27. The relative ageing of the Community fleet reflects the reduced
    level of investment in new ships. This is in some cases a fully
    justified decision In an oversupplied market. In other cases,
    however, it reflects reduced possibilities because of reduced cash
    flow. In any event it means a reduced opportunity to benefit from
    developments in shipbuilding design and construction aimed at
    increasing operational efficiency and reducing running costs. The
    continuation of such a trend would contribute further to a loss of
    competitiveness in the Community fleet.
(*) See also section 11.(3) below
 ---pagebreak---                                   - 8 -
    (d) Shrinkage in employment
28. The contraction of the Community fleet and the development of more
    technologically advanced ships with lower manning requirements has
     led to reduced seagoing employment (Table 9 ) . The total number of
    seafarers employed in the Community fell by about 138,000 or some
    45%, between 1980 and 1986 to barely 169,000. In 1980 the
    Community-registered fleet employed about 54,000 seafarers of
    nationalities other than that of the flag state out of a total of
    about 307,000. Although precise figures are not available, the
    number of Community nationals on board vessels registered in ...
    another Member State is limited, the largest part of non-domiciled
    seafarers being nationals of third countries. Their number had
    dropped to about 18 600 in 1986, this reduction being accounted for
    to a large extent by the reduction by about 23,800 in employment of
    non-national seafarers in the Greek fleet and by about 8 200 in the
    UK fleet.
29. Comparable information is not available for non-seagoing employment
    in the Industry, but this too has probably declined. In addition,
    there have been significant job losses in related industries such
    as shipbuilding and ship repair, the bulk of the orders for which
    come from Community shipowners.
    (2) THE COMPETITIVE DISADVANTAGE OF THE COMMUNITY FLEET
30. All world fleets have faced the problem of excess capacity
    aggravated by recession and continued heavily subsidised
    shipbuilding especially in the Far East. However, the acute
    competition and cuts in freight rates have led to the relatively
    much greater decline in the Community fleet in a position of
    comparative disadvantage. The previous communication identified the
    loss of comparative advantage as a main factor in the decline. In
    the past Community fleets have countered competition by maintaining
    a technological lead and providing a higher quality of service.
    However, in recent years third country fleets have expanded with
    modern vessels to at least match technically the Community fleet
    and the cost disadvantages of operating under Community flags have
    proved too great for many shipowners. Whilst world market
    conditions have now improved very significantly, the problem of
    comparative disadvantage remains.
31. In part there have been the growth of protectionist measures by
    third countries and unfair pricing practices. The Council
    Regulations on coordinated action to safeguard free access to
    cargoes in ocean trades and on unfair pricing practices in maritime
    transport are now available to combat such practices* 1 ).
32. To compete effectively, however, Community shipping has to face the
    problem of loss of comparative advantage. Shipowners when flagging
    out have emphasised in particular the importance of reducing crew
    costs in making their decision. Third country crews have been so
    much cheaper not only because basic wages have been lower but also
    because the seafarers' taxes and social security contributions
(1) ÔJ L 378 31.12.86
 ---pagebreak---                                   - 9 -
     (payable by the seafarer and employer) are lower or non existent.
     Tax treatment of shipping companies must also be taken into account
     in this connection: a company established in an open register
     country does not pay any corporate income tax.
33. The importance of crew costs in the total costs of a vessel varies
     considerably with the age, category and financing of a vessel and
     the tax system under which the shipowner Is operating his business.
     In the first year of a new vessel of relatively high capital cost
     such as a container vessel the allocation for depreciation and
    .Interest may be substantial. After amortisation and loan repayment
     crew costs become a more significant consideration. However, in
     either case, the degree of competition is sufficiently acute for
     shipowners to examine carefully the possible cost savings of
     employing third country crews under the flags of convenience or
     alternative registers with less stringent crew nationality
     conditions. The fluctuation of currency exchange values can also
     prove decisive in certain circumstances.
34. The studies for the Commission referred to above* 1 ) provide
     examples of such variations based on certain fixed assumptions. One
     example of a container vessel of 1500 TEU operated by-a UK company
     had a total cost structure in the first year dominated by
     depreciation of 58% and loan interest 18% with fuel 10%, and net
     salaries 7% with wage taxes 2%. By the fifth year the balance of
     the cost structure had altered to depreciation 31%, loan interest
     21%, fuel 16% and net salaries 12% with wage taxes 4%. In the case
     of a cheaper bulker vessel capital costs as a proportion of total
     costs are realtively low and by the twelfth year costs for the crew
     could come close to half of the ships overall costs (about 46% In
     the example given in Table 10). The low purchase price of bulkers
     in recent years has accentuated this position* Further examples and
     details are given in Annex 5 and Table 10 (see also footnote* 2 )).
35. The age structure of the Community fleet (Table 8 ) , with a high
     proportion of vessels above 10 years old, Is especially relevant
     from this point of view. The development of more advanced vessels
     with lower manning requirements should help Member States with
     relatively high manning costs by reducing the relative importance
     of this cost element (on this subject see Section VI.1 - Manning
     and Research). Furthermore there are significant cost advantages
     especially In fuel consumption and maintenance which can be gained
     by Investment in modern vessels.
(1) See footnotes 2 to paragraph 6
(2) Another study (source below) has suggested that running costs of a
German registered vessel could be reduced by 30% on average by flagging
out of which 90% was represented by savings on crew costs. Such figures
emphasise at least In Germany the Importance of crew costs In the
consideration of alternative sltl» registers by Community shipowners and
give an indication of the seals of the problem In maintaining
competrtlvity.
Source: Schlffahrtsgutachten vom Institute of shipping economics and
logistics, Bremen, vom 30.9.87 Untersuchung von Massnahmen zur mit te I -
und langfrIstlgen Slcherung der deutschen Seeechlffahrt im Auftrag der
Bundeelaender Bremen, Hamburg, Nledersaehsen und Schleewlg - HoIstein.
 ---pagebreak---                                  - to -
36. Whilst technological developments have made possible significantly
    reduced manning scales as compared with the past, In some Member
    States the relevant regulations have not been adapted accordingly.
    As a result, these Member States' fleets* are now burdened with an
    additional handicap which could be alleviated by the adoption of
    more appropriate manning scales.
37. Furthermore, in certain Member States shipowners are as a rule
    required to build their vessels in the national shipyards, at
    prices higher than they would pay In the world market; and, in. at
    least one country, when permitted to buy abroad they have to pay an
    import duty. The resulting burdens on the price of the ship are
    quite heavy; and the position becomes more difficult If this comes
    on top of antiquated manning scales and any other disadvantages,
    vis a vis competitors. In respect of crew cost elements mentioned
    above.
38. During the last year, the problems facing the shipping industry
    have eased to some extent, as economic recovery and the scrapping
    of surplus ships have brought supply and demand for shipping Into a
    better balance, although the position varies from sector to sector.
    However, such changes in economic conditions do not eliminate the
    structural comparative disadvantage which Community shipping
    suffers as against many third country fleets - except to the extent
    that certain Member States have already taken measures to improve
    the competitiveness of their shipping industry.
    (3) MEASURES TAKEN BY MEMBER STATES
39. Faced with the increasing tendency for shipowners operating under
    their national registers to transfer their vessels to open
    registers outside the Community, or leave the Industry altogether,
    the Member States havs responded In a variety of ways. Measures
    have been introduced with the main aim of reducing operating costs.
    A number of cost factors depend on government Intervention - in
    particular, taxation of shipping companies and seafarers and social
    security contributions - and It Is in these areas that Member
    States have started to act. In addition, some Member States have
     Introduced financial aid to shipping companies In the form of
    operating subsidies or aid for the repatriation or training of
    crews.
40. In a number of Member States, the use of existing offshore
    registers has been greatly expanded, or new offshore or
    "International" reglstsrs have been established. By means of such
    registers, Member States compete to lower costs by easing the
    conditions under which vessels are operated. These reduced
    operating costs of shipowners may be achieved by lower registration
    costs and little or no taxation. However, a common character letic
    of such registers Is the possibility of replacing Community
    seafarers by employing non-community seafarers on non-Community
    wages and conditions. Traditionally, these seafarers have come from
    developing countries, particularly thoss of the Far East, but
    COMECON countries are now becoming important too as suppliers of
 ---pagebreak---                                   - 11 -
    officers as well as ratings. By replacing Community seafarers in
     this way, shipowners attempt to meet the competitive advantage of
    non-community operators who employ crews from low-wage areas of the
    world.
41. Among the registers whose use has been expanded in this way are
     those of the Isle of Man, Hong Kong, the Cayman Islands and
    Bermuda; Kerguelen (French Antarctic Territory); and the Dutch
    Antilles. In addition, Danish and German International Registers
     have been set up, following the successful model of the Norwegian
     International Register. A new register is also being founded in
    Luxembourg, with the cooperation of the Belgian authorities.
III.   THE NEED AND SCOPE FOR COMMUNITY ACTION
         (1)  NEED FOR A COMMUNITY FLEET
42.      There are three main lines of economic and commercial argument
         which call for the need to support a merchant fleet registered
         in the Community and manned as far as possible with Community
         seafarers. These arguments are relevant both for national and
         Community measures and acquire additional significance within
         the context of the effort to complete the internal market.
43.      The first consideration is that shipping is strategically vital
         for the Member States and for the Community itself as the
         world's leading trading area and there should not be an
         overdependence on third country fleets. Shippers should have
         the option of using a competitive Community fleet, at least
         controlled by Community interests but preferably flying a
         Community flag, for carrying their imports and exports.
         Sometimes indifference Is expressed about the flag of the
         vessel carrying goods as long as the price Is competitive. In
         the long run the Commission considers however that the loss of
         a Community fleet could have an adverse influence on the
         quality and cost of transport to and from the Community and
         damage the Community's trading position.
44.      Second, there is employment generated by the Community fleet.
         There is a strategic need not only to retain Community vessels
         but to maintain a force of well trained experienced seafarers.
         As noted above there remains a significant but fast declining
         number of Community eeafarers. The uncertain prospects have
         also made the profession less attractive for new recruits and
         the numbers in maritime academies have been dwindling. At a
         time when the Community gives particular attention to the
         social dimension of the Internal market, it needs to provide a
         perspective to the people employed in the shipping industry.
45.      It is Important also to remember employment In related services
         and industries. To some extent services such as insurance have
         many clients on third country registers but others such as
 ---pagebreak---                              - 12 -
    shipbuilding are very much dependent on the health of national
    fleets. There seems little doubt that a further decline in the
    Community fleet would damage the interests and employment in
    these associated sectors.
46. A third concern is the loss of the direct contribution made by
    Member State fleets to the balance of payments through their
    operation both in home trades and in cross trades.
47. In addition to these economic and social considerations, Member
    States may have defence policies which depend on the
    availability of Community vessels and experienced Community
    seafarers.
    (2) THE SCOPE FOR COMMUNITY ACTION
48. The decline of the fleet is, as seen above, a matter of concern
    for both the Member States and the Community. The assessment
    of the facts presented in Chapter II leads to the conclusion
    that the downward trend in ownership, flag and crew of the
    Community fleet can only be stemmed by active policies. Member
    States have started adopting a variety of measures aimed at
    stemming the decline and retaining vessels under their flags.
    The challenge for the Community is whether it shall, and if so
    how, contribute to redressing the situation of the European
    shipping industry.
49. In a situation where the Community is completing its internal
    market for goods and services in general it cannot allow a
    fading away of its presence on the world shipping market and a
    drifting apart of Member States' own national policies of
    assistance to their fleets, with the consequent danger of
     increasing disparities inside the Community and distortion of
    competition between Community shipowners. The question as to
    how the Community should contribute, beyond trying to secure
    free and fair competition in the world shipping market through
    the implementation of the package of Regulations adopted in
    December 1986, needs further consideration.
50. First the objective must be clear. The objective of the
    Community cannot be to seek that as many ships as in the early
    80's be owned by nationals of Member States or shipping
    companies established in the Community. Nor is it necessary
    that all ships owned by nationals of Member States are
    regletered in one of the Member States registers or manned
    totally by their nationals. It is sufficient that the three
    elements, namely Community ownership, registration and crew are
    achieved to a relative extent. The degree of meeting this
    requirement depends on the situation of the world shipping
    market,* the structural changes taking place and the extent to
    which Member States and the Community can assist the fleet.
51. The aim of this assistance is reduction of disparities in
    operating conditions between the Community fleets and their
    foreign competitors insofar as the operating
 ---pagebreak---                               - 13 -
    conditions in Europe adversary affect the costs of European
    operators. The shipping industry Is, like certain other
    industries of the Community, facing strong competition from
    third countries. But shipping is more vulnerable than
    textiles, steel or agriculture since it has to face
    International competition without any help from external
    Community customs borders or other measures of foreign trade
    policy. In short, there is no internal Community shipping
    market as distinct from the world market. As agreed by the
    Council In the debate preceding the adoption of the package of
    Regulations in December 1986, even sea transport between Member
    States of the Community is open to anybody from the rest of the
    world.
52. Therefore the normal function of the Community of harmonising
    conditions of competition between the Member States is only
    relevant to shipping Insofar as It might be a by-product of an
    adjustment of the European operating conditions to those
    existing on the world shipping market.
53. The Commission believes that an action programme is necessary
    to help the Community shipping industry stem the decline of the
    fleet. This action programme must meet a number of criteria:
        It must be in line with the non-protection 1st shipping
        policy of ths Community, based on the principle of free and
        fair competition in world shipping;
        It must be effective in responding to the situation facing
        the Industry;
         It must be capable of speedy introduction;
         It must prsvent the growing divergence between Member
        States policies which are tending towards a "beggar thy
        neighbour" effect and, as far as possible, reduce existing
        divergence;
         It must maintain, to ths highest possible proportion,
        Community employment In the sector and provide a
        perspective to thoss employed in It;
        It must not Isad to the undermining of Internationally
        agreed safsty and environmental standards and employment
        conditions;
        It must not drlvs up freight rates to the detriment of
        shippers;
         It must be adapted to the financial possibilities of the
        Member States.
54. The Commission has considered what scope there Is for action to
    be taken by the Community which would meet the above objectives
    and criteria. It has concluded that such action should be
    taken in three ways:
 ---pagebreak---                                      - 14 -
           (i)   by the setting up of a Community register of ships flying
                the European Flag in addition to their national flag;
           (ii) by the clarification of the Commission's approach to
                fiscal and financial measures taken by the Member States;
                and
           (iii) by a set of other actions and accompanying measures, as
                already referred to in paragraph 5, by which the position
                of the fleet could be improved. Some of these actions and
                measures can be linked to the Community register.
           Subjects (i) and (iii) above are dealt with in the following
           two sections, respectively. Fiscal and financial measures are
           the subject of guidelines adopted by the Commission for the
           examination of state aids to Community shipping companies.**).
   IV.     A COMMUNITY SHIP REGISTER AS A MEASURE TO STEM THE DECLINE OF
           THE COMMUNITY FLEET.
   55.     The Commission has investigated the possibility of setting up
           an EC register, whose ships would fly the Community flag.
           Whilst the setting-up of a single Community register cannot be
           seen as a short-term prospect, the establishment of a parallel
           register would be technically and legally feasible. Under this
           arrangement ships would remain on the register of a Member
           State, and would remain under the control and jurisdiction of
           the Member State. But they would also be eligible for
           registration in the Community register, subject to certain
           conditions intended to ensure that the register serves its
           purpose of contributing to the maintenance of a Community
           shipping fleet and a workforce of high quality Community
           seafarers.
   56.     There are obvious attractions in a single Community register as
           a replacement for the present assortment of registers with a
           variety of conditions linked to Member States to different
           degrees. The legal and practical implications of a single
           Community ship register would need however careful examination.
   57.      It has to be recognised that existing maritime law and
           conventions vest jurisdiction and control in administrative,
           technical and social matters In the national state. The
           administrative needs of a quality independent register include
           a competent inspectorate to secure compliance with
            international conventions and enquire into maritime casualties.
           There are also policing and legal functions which can include
           detection and dealing with fraud and the arrest and enforced
           sale of vessels if necessary, as well as the ability to act in
           the case of vessels detained or confiscated in third countries.
           There is no short-term prospect for setting up a single
            independent registry for the Community.
   58.     The Community can play a fuller role In the international
           mar itime organisât ions dealing with the technical and social
           aspects of shipping; to this end the Commission wi11 exploit as
   (*) èEC(ÔÔ)921
4)
 ---pagebreak---                              - 15 -
    far as possible the present status of the Community as an
    observer. In time the Community could formally accede to IMO
    and ILO conventions and accept certain responsibilities. This
    however would first require amendment of those conventions to
    make Community accession possible.
59. Alternatively, as a first step, the Community can set up a
    parallel register to Member State registers. Vessels which are
    registered in a national ship register of a Member State, while
    staying in that register, would also be eligible for
    registration in a Community register, provided that adequate
    safety and social standards on board such vessels are being
    enforced and will be enforced by the Member States concerned.
    Vessels acquired by Community vessel owners (as defined in
    Annex 1, Article 3.2) on the basis of a bareboat charter and
    entitled to fly the flag of a Member State would also be
    eligible, under certain conditions.
    The Commission reminds the Member States that the provisions on
    the admission to the national register have to respect the
    fundamental principles of the EEC Treaty, especially with
    regard to the prohibition of discrimination on the grounds of
    nationality and the right of establishment.
    The parallel register would set minimum requirements for the
    conditions with respect to the nationality of seafarers and
    thereby seek to obtain the observance of such requirements
    throughout the Community.
60. Conditions for registration as a Community vessel would include
    a requirement that at least a specified number or proportion of
    seafarers on board should be nationals of a Member State. Such
    a condition would place a limit on the number of foreign and
    non domiciled seafarers who could be employed by Community
    shipowners, and safeguard the employment of a minimum of
    Community nationals employed on board the vessels concerned.
    Owners of ships on the EC register would however have to employ
    Member States' nationals in greater numbers than the specified
    minimum, where this was a requirement of the Member State
    register involved. Such a requirement must be applied in
    conformity with the fundamental principles of the EEC Treaty on
    the prohibition of discrimination on the grounds of nationality
    and the free movement of workers. Ships on Member State
    registers which permit a lower proportion of Member States'
    nationals would be admitted to the EC register only if they
    complied with or exceeded the EC minimum.
61. The crew nationality requirements would aim to achieve one of
    the objectives of the Community ship register, which is to
    secure the employment of European seafarere in highly-skilled
    functions and as far as possible those In other functions.
    While each Member State has the right to seek full employment
    opportunities for Community nationals in the latter functions
    through national measures, it would be unrealistic to give an
 ---pagebreak---                                 - 16 -
        assurance that they could invariably remain employed at the
        wage level of the Member State, at least not for the Community
        as a whole. The Community ship register, while requiring a
        substantial European element in the manning of the highly-
        skilled functions, does not prevent shipowners of ships
        registered in it from employing third-country seafarers at
        rates agreed with their representative organisation, provided
        that the provisions of the ILO wages, hours of work and Manning
        (Sea) Recommendation (No 109) were respected. Equally, social
        security for seafarers of third countries must be provided on a
        level which reflects the standards of the country where the
        seafarer is resident, following the provisions of the ILO
        Social Security for seafarers (Revised) Convention, No 165.
        As far as the highly skilled functions are concerned, the
        requirements for the Community ship register reflect the trend
        in some Member States to secure the employment of officers and
        certified seamen by requiring a minimum number of seafarers
        with national or recognised certificates. In determining such
        minimum requirements for the Community register, account is
        also taken of the differences in operating costs with Community
        shipowners' major competitors and the need that they be reduced
        to an acceptable level, which, together with other competitive
        advantages, would be sufficient to compete effectively in the
        worId market.
62.     The flying of the Community flag would then be an indication
        that the vessel concerned met high standards of quality,
        reliability and safety. Within the EC register obstacles to
        the transfer of ships from one Member State register to another
        could also be removed through the recognition of technical
        equipment. Similarly, the free movement of seafarers between
        vessels on the EC register would also be facilitated through
        the mutual recognition of their qualifications.
63.     Finally, advantages of "a fiscal and financial nature made  *
        available by Member States should be used in a way which make
        them appropriate to reach the objectives pursued by the
        creation of an EEC register. In considering such advantages,
        regard will need to be had to the objective of preventing a
        divergence, and achieving a convergence, of the conditions of
        competition among Member States. The various possible fiscal
        and financial advantages which Member States will wish to
        consider, the contribution which they could make to restoring
        the competitive position of Community shipping, and the
        approach which the Commission intends to adopt in relation to
        such measures, are discussed in a Commission document on the
        subject.**)
64.     From a broader perspective, the establishment of a parallel
        Community register would have other obvious attractions. The
        European flag flying on Community vessels throughout the world
        would be a powerful reminder of the Community presence in
        global trade, and a symbol of the Community as a single trading
        entity. The register would also serve as a focus for
        discussions to achieve a greater cohesion in the Community of
        operating conditions.
(*) "Financial and Fiscal Measures concerning Shipping Operations with
    Ships registered in the Community", SEC(89)921
 ---pagebreak---                                 - 17 -
65.     Technically and legally speaking the setting up of a parallel
        register is not a major problem. It is not in conflict with
        the new UN Convention on conditions for registration of ships
        since it does not lead to registration in two different states.
        The ship remains on its national register and the legislation
        of the Member State governs the control and jurisdiction over
        the vessel. Indeed, if a ship Is entered in the Community
        register, it would be ascertained that the registration on the
        national register still existed. The entry itself could be
        relatively simple with no transfer of ownership, renegotiation
        of lease, loan agreements or mortgages, re-survey and re-
        measurement .
66.     In general such a register would secure the discipline needed
        to make a system of harmonised, yet less burdensome, operating
        conditions better workable. Moreover, it would be the
        intention by adopting sufficiently attractive conditions to end
        the necessity for setting up and maintaining second or offshore
        registers.
        A proposal for a Council Regulation for the establishment of a
        Community register as above described is attached at Annex 1.
V.      AREAS FOR FURTHER ACTION & ACCOMPANYING MEASURES
        (1)  MANNING AND RESEARCH
67.     Manning costs are the main component of the competitive
        disadvantage of the Community vis-à-vis its competitors of
        third countries. The same factor also largely accounts for the
        disparity between the operating costs of the ships belonging to
        the European fleets.
68.     Research can contribute to the objective of improving the
        competitive position of Community fleets by leading to
        improvements in technical efficiency which result in lower
        operational costs through improved fuel efficiency and reduced
        maintenance and manning costs. Third country fleets can also
        take advantage of such developments but Member State fleets
        because of relatively high manning costs will benefit in
        particular from advances which lead to reduced crew sizes.
69.     There has been some consideration of manning costs as a
        proportion of total running costs in Chapter III. A further
        example has been based on the manning costs of a container ship
        of 1500 TEU (1) which show that manning costs (basic wages,
        overtime, leave pay, social security contributions, retirement
        provisions, crew rotation, travel and victualling) amount to
        50% or more of operating costs with the exceptions of Portugal
        and Greece.
70.     Differences between the annual costs of a sailor on board
        Member States' vessels*1) have to be related to the various
        systems of social security (e.g very high contributions in
        France), or to the different levels of wages (Italian case).
(1) See Annex 5
 ---pagebreak---                                   - 18 -
        The negative effects of this situation (together with
        technological improvements) on the number of seafarers employed
        are shown in Table 9 of the Statistical Annex: diminution of
        the supply with the main effects of a decline of the number of
        Community seafarers on board of the ships of the Member States,
        reduction of crews, and recruitment of low cost manpower.
71.     In that respect the tendency can now be seen in Member States
        to modify their strict regulations concerning the size and
        composition of the crew and to allow, under certain conditions,
        the interested parties to determine their needs, case by case,
        with reference to the equipment and the qualification of the
        staff on board.
72.     In addition, using the most specialised techniques and offering
        high-quality services are important considerations in seeking
        to maintain a competitive position in world shipping.
73.     Taking into account the changes which have occurred in the
        equipment of ships and new transport techniques, the
        Commission considers that the rationalisation of work on board,
        adapted to the needs related to innovation and restructuring,
        constitutes an appropriate instrument for improving
        productivity and as a consequence the competitiveness of the
        sector.
74.     The Commission believes that to achieve a balanced
        rationalisation, consultation and negotiation have to be
        developed, by obtaining the cooperation and the commitment of
        social partners in the definition of the tasks and functions of
        staff on board to achieve safe navigation consistent with a
        commercial management ashore.
75.     These measures of rationalisation have to be accompanied by
        standardised automation programmes to develop the exchange of
        data ship to ship, ship to land and between users: shipowners,
        ports agencies, administrations and others.
76.     Finally such a rationalisation conceived for safety as well as
        for commercial management needs, requires that training
        programmes, both theoretical and practical, are developed in
        view of both the needs of the ships under operation and of a
        continuing innovating process in the management of the ship.
77.     The improvement of productivity based on advanced and/or
         improved techniques requires continuing progress in research.
        Some Member States have undertaken action in that respect and
        have started research programmes on the ship of the future.    t
         is in that field that cooperation and coordination at Community
         level can be most fruitful.
78       In the context of the framework programme for Community
        activities in the field of research and technological
        development* 1 ), the Commission is finishing the preparatory
(1) Ô.J. L3Ô2 24.10.87
 ---pagebreak---                                -19-
        work of a four-year programme for Research and Development in
        the field of Transport, a section of which is devoted to
        Maritime Transport.
        The main objectives of the transport programme are the
        improvement of the efficiency and the competitiveness of the
        transport system, the improvement of safety and work conditions
        and the protection of environment.
79.     Amongst the themes of research relating to maritime transport
        special priority is being given to:
            research into the interface between the human being and the
            ship and on-board equipment, including investigation of the
            possibility of integrating and automating certain
            functions; and
            research into the use of manpower, with a view to
            determining the optimum crew for different types of vessel.
80.     The new BRITE/EURAM Programme covering Research and Development
        on manufacturing technologies and advanced materials will
        include some R & D topics relevant to the shipbuilding
        industry. These topics deal with material technology, design
        methodologies and assurance, manufacturing technologies and
        processes such as shaping, assembling and joining.
81      It is worth mentioning also the COST projects. Two of them
        concern safety at sea and one the maintenance management of
        ships. As regards safety, the project COST 301 was directed at
        shore-based marine navigation aid systems. An executive and a
        main report of this project have been published* 1 ). The
        follow up to COST 301 consists of a new research COST project,
        called 311, concerning the simulation of maritime traffic, and
        a research project on the design and assessment of a vessel
        traffic management system, which is to be included in the
        Research and Development Program mentioned in para. 78 above.
        Project COST 308 relating to maintenance of ships commenced in
        1987. Through the management of maintenance systems on board
        the expected results of this research will contribute to
        rationalisation of the functions of crews.
        (2) TECHNICAL HARMONIZATION AND STANDARDIZATION AND THE
        TRANSFER OF SHIPS BETWEEN COMMUNITY COUNTRI ES
82.     One measure under consideration by the Commission is the
        achievement of mutual recognition within the Community of the
        technical equipment of ships. Costs to shipowners transferring
        vessels between Community ship registers may arise from the
        need to change equipment completely, supplementary work to
        existing equipment, additional testing or approval fees and the
        time in delays. In the past mutual agreement on standards has
        been achieved only after long detailed discussion between
        experts and a considerable amount of such work will still be
        necessary. However, an impetus has been given to the work by
        the need to achieve the Single Market.
(1) CEL COST EUR 11250 EN Luxembourg 1987
    CEL COST EUR 11304 EN Luxembourg 1988
 ---pagebreak---                              - 20 -
83. One approach considered by the Commission has been that
    representatives of marine equipment manufacturers and the
    European Association of Classification Societies should draw up
    a list of those items of marine technical equipment on which it
    is felt that there can be agreement on mutual recognition.
    This list would be then offered for consideration by the
    national administrations and clear the ground for discussion on
    other items.
84. This idea has been explored with the European Associât ion of
    Classification Societies which produced a list of around 400
    items; for each item information was provided on whether there
    is a need for certification by the particular national
    regulatory authorities, limited mutual recognition of the
    certificates of other authorities or general recognition. The
    broad finding was that the authorities accepted only equipment
    approved by themselves. Where there were deviations from the
    rule, cases tended to be considered on an individual basis.
85. The Classification Societies recognised the need to maintain
    high safety standards and proposed:
         initial control on type approval of marine and marine
        related equipment;
         initial control on installations and laboratories where
        type approval is carried out;
         initial control on manufacturers of marine and marine
        related equipment and
        regular control on maintenance of required standards and
        compliance with regulations for marine and marine related
        equipment.
    The Classification Societies would be prepared to set up and
    operate such a system acting on behalf of the governments
    concerned.
86. However, in view of the fact that the Community is now in the
    process of establishing EC-wide standards and certification
    procedures, so that products meeting stipulated "essential"
    requirements concerning health, safety, the protection of the
    consumer or the environment can be marketed freely throughout
    the Community, it seems that the time has come to reconsider
    the foregoing initiatives in the framework of the Community's
    New Approach on Technical Specifications, Testing and
    Certification, adopted by the Council in its Resolution of 7
    May 1985 (OJ No. C 136, 4.6.85).
87. The situation in this sector is, however, complicated by the
    fact that the international character of technical regulation
    of the shipping industry is highly developed and it would be
    undesirable for the Community to follow an approach which was
 ---pagebreak---                                - 21 -
    independent of developments within IMO. It would still be
    possible, however, to imagine a situation in which the
    Community, acting within the constraints of the international
    framework, developed a new approach to the implementation of
    international recommendations within its jurisdiction.
    This approach could be summarized as follows:
        The Community would, through a Directive, agree upon a
        basic set of essential requirements for ships and their
        equipment (perhaps based upon existing IMO documentation);
         In the light of those agreed essential requirements, the
        Community as such would henceforth negotiate in IMO
        discussions on the development of new international safety
        recommendations;
        Adoption of future IMO recommendations as new or revised
        essential requirements would take place through a
        Community-1 eve I decision, on the basis of a proposal
        submitted by the Commission to an appropriate regulatory
        committee;
         In its decisions on how to implement adopted IMO
        recommendations, the Community would decide case-by-case to
        what extent it would be appropriate to follow the new
        approach to technical harmonization, that is:
         . to lay down technical specifications and conformity
        assessment procedures in Community legislation, or
         . to delegate the task of defining such specifications to
        standardization bodies, thereby giving them a voluntary
        character which nevertheless provided a presumption of
        conformity to the essential requirements.
88. This approach would have to be supported by Initiatives in the
    shipping industry and the related marine industries to create
    the necessary infrastructure in the voluntary sector, both in
    the European standardization bodies and in the future European
    Organization on Testing and Certification, in order to ensure
    that sufficient expertise is available to develop the
    standards, test methods and certification procedures needed
    under the new approach. Following consultations of the main
    interested parties and national administrations during the next
    12 months, the Commission will submit proposals concerning the
    different areas of action.
89. The Commission considers that ships which will be accepted on
    the Community ship register should not be hindered by technical
    obstacles in being transferred between Community shipowners and
    Member States' flags. To achieve this, the period until the EEC
    register is established has to be used so that any technical
    obstacles are removed. Accordingly, the EEC register will
    Include a provision to the effect that any vessel on the
 ---pagebreak---                                    - 22 -
         register which has valid certificates and classification and
         which meets the essential technical requirements to be laid
         down by the Council according to the provisions of the Treaty
         by the time the EEC register is established, may be transferred
         to the register of another Member State without the imposition
         of additional technical requirements.
90.      Meanwhile, the Community already disposes of an instrument
         whereby deviations between national technical requirements can
         be limited. Directive 83/189/EEC requires that all proposed
         national technical regulations (that is, technical
         specifications which are made obiigatory by law) are notified
         to the Commission and the other Member States, and may not be
         adopted until a-certain time limit" has elapsed. Adoption of
         such measures may be delayed if the Commission or another
         Member State considers that they will create obstacles to the
         free movement of goods. In this context the Commission notes
         with regret that the Member States have until now not respected
         the obligation to notify technical specifications in the sector
         concerned. The Commission Is therefore considering to initiate
         infringement procedures in this respect.
         (3)   SOCIAL MEASURES
91.      In order to reduce differences in working conditions in the
         Community fleet attention should be given to social measures.
         These should lead to a greater coherence In the maritime sector
         in relation to the international context in which the fleet
         operates. This would involve strengthening the dialogue and
         co-operation between the social partners especially in the work
         of the» restructuring of the fleet and enable individuals and
 -~~**~~"Duslnees*s to^faee^better the challenge of modernisation.
92.      The Commission will, therefore, consult with the Joint
         Committee on Maritime Transport* 1 ) in developing measures
         relating to:
              the improvement of specific working conditions in the
              shipping industry;
              the drawing up of common programmes of training and
              retraining adapted to the needs of technological change;
              mutual recognition of diplomas, licenses and certificates
              of competence.
93.      In respect of training programs, attention will be given to
         training needs in connection with rationalization of work on
         board and in particular in connection with the multi-functional
         concept of work. (See also para. 76 in Section V . 1 ) .
94.       In respect of the last item mentioned in para. 92 above, the
         recently adopted Council Directive 89/48/EEC of 21.12.88 "on a
         general system for the recognition of higher-education diplomas
(1) OJ No. L253, 4.9.87
 ---pagebreak---                                  - 23 -
        awarded on completion of professional education and training of
        at least three years' duration"* 1 ) will cover certain
        functions on board ships. However, for those not falling within
        the scope of the Directive, It will be necessary to make
        proposals to achieve comprehensive coverage of mutual
        recognit ion.
95.     In the specific field of maritime transport the International
        Convention on Standards of Training, Certification and
        Watchkeeping for Seafarers (1978), adopted in 1984, lays down
        internationally accepted minimum standards for the training and
        certification of Masters, Officers and Ratings. It also
        establishes watchkeeping standards. All Community countries
        have ratified this Convention which can serve as a useful
        instrument to achieve mobility and equality of standards within
        the Community.
96.     The Commission considers that in the case of vessels which have
        joined the proposed EC register it would be particularly
        inappropriate for any unnecessary obstacles to exist in the way
        of free movement of seafarers between vessels of the Member
        States. Therefore, the proposed register will include a
        specific provision that seafarers of any Member State will be
        free to work on any vessel on the register provided they meet
        the minimum requirements for professional training and
        experience laid down in the IMO STCW 1978 Convention.
        (4) ENSURING THE OBSERVATION OF INTERNATIONAL IMO/ILO STANDARDS
97.     Whereas the observation of internationally applicable IMO and
        ILO standards by all ships is essential for reasons of safety
        of ships and crew and for environmental protection, it can also
        have a beneficial effect for the Community fleet through
        eliminating unfair competition from ships not observing those
        standards.
98.     This is an area for continuing action, and the Commission plays
        an active role with a view to strengthening the enforcement of
        Port State Control. It also intends to play a full role in the
        protection of the marine environment and the fight against
        pollution. The Commission, wi11 participate, to this end, in the
        appropriate meetings of the International Maritime Organization
        and the relevant regional agreements, such as the Bonn
        Agreement on the North Sea and the Barcelona agreement on the
        Mediterranean Sea.
99.     The Commission attaches particular priority to the effective
        application of the ILO Merchant Shipping (Minimum Standards)
        Convention, 1976 (No. 147), and has recently taken the lead, in
        conjunction with the Port State Control Secretariat and the
        maritime branch of the ILO, in achieving agreement among the
        countries subscribing to the Memorandum of Understanding on
        Port State Control on the integration of this Convention into
        the manual for surveyors. Appropriate amendments to the
        relevant Annex 1 of the MOU have been accepted, taking effect
        on 11 May 1989. The task ahead is to secure their
        implementat ion.
(i) ÔJ No L 19, 24.1.89
 ---pagebreak---                                  - 24 -
100.    In order to strengthen the effectiveness of Port State Control
        and to ensure uniform standards of application throughout the
        Community, the Commission will continue to finance seminars for
        surveyors on specific subjects. Seminars have been held in
        Lisbon and Rotterdam on the implementation of MARPOL 73/78, and
        it is now the Commission's intention to support two such
        seminars each year on the subject of ILO Convention 147.
101.    The Commission considers that the system of Port State Control
        has been developing in a satisfactory manner although there is
        still room for improvement. The Commission, through its work
        in this field, will continue to encourage Member States to
        implement Port State Control procedures fully and effectively.
        If however this is not achieved and it becomes evident that
        competitive pressures amongst the various ports of the
        Community are undermining the application of Port State
        Control, the way to deal with them would be by writing the MOU
        into Community law. The Commission maintains on the table the
        draft Directive proposed in 1980* 1 ) with this end in view. It
        considers, however, that the target laid down in the Memorandum
        of Understanding on Port State Control of inspecting 25% of
        individual ships entering the ports of each Community country
        should be attained if international standards are to be
        maintained and the high levels of inspection already attained
        are to continue.
102.    The Commission also considers necessary that Member States,
        which have not sofar done so, ratify all the relevant
        conventions as soon as possible, particularly MARPOL and ILO
        147, and that their provisions are applied to their own flagged
        ships as well as to those of third countries.
103.    At this stage, therefore, the Commission addresses a
        Recommendation to Member States in respect of the 25%
        inspection target and the ratification of the relevant
        conventions, as mentioned above; the Recommendation is attached
        in Annex 2.
104.    The Commission will encourage the existing trend to establish
        forms of co-operation with non-signatories of the Memorandum.
        Co-operation agreements already exist with the United States
        and Canadian Coastguards. The Soviet Union has inquired about
        possible forms of co-operation. Over the past few years
        exchanges of information on Port State Control have been taking
        place with the Maritime Authorities of Japan. Such co-
        operation and the establishment of effective, concerted and
        uniform regional Port State Control systems elsewhere in the
        world will contribute to reducing sub-standard shipping in the
        world.
(1> ÔJ C 192, 36.7.80
 ---pagebreak---                                - 25 -
     (5) PROMOTION OF THE USE OF COMMUNITY FLAG SHIPPING FOR
     TRANSPORT OF FOOD AID
105. During the past decade Community shipowners have pressed for
     improvements in the system of "mobilization" of Community food
     aid. This system consists generally of a package whereby a
     company ("the mobilizer") purchases the food, transports it to
     its destination and is paid a "package price" for the entire
     operation. In practice, mobilizers use vessels flying a wide
     range of flags, including occasionally flags of countries
     politically undesirable for the transport of Community aid paid
     for by the Community taxpayer.
106. The provisions of Commission Regulation No.2200/87 on the
     mobilization of food aid were a step forward insofar as they
     opened up the possibility of forbidding the transport of food
     aid by shipowners of third countries whose practices are
     harmful to Community shipowners or who benefit from schemes
     which legally or in practice reserve cargoes for their
     shipowners.
107. The Commission considers it necessary that EC shipowners be
     given the opportunity to offer their services for the transport
     of Community food aid cargoes. It also considers that the very
     fact that these cargoes are Community aid to third countries
     justifies that they be carried with ships flying the Community
     flag , ships registered in a Member State and meeting the
     requirements for registration in the Community register or
     ships flying the flag of developing countries pre-qualif led by
     the Commission on the basis of objective technical and social
     criteria.
108. Measures will be taken so that mobilizers of food aid will be
     obliged to use, for the carriage of food aid, ships on the
     proposed EEC register, ships on a Member State's register and
     meeting the requirements for registration in the Community
     register or ships flying the flag of developing countries pre-
     qual if led by the Commission as above.
     (6) DEFINITION OF A COMMUNITY SHIPOWNER
109. As long ago as 1979, upon the adoption of Regulation 954/79 on
     the ratification of the UN Liner Code, the need was felt to
     jointly define a "national shipping line" for the purpose of
     the Code of*Conduct for Liner Conferences. Some Member States
     did not wish to rely only on the procedures of Regulation
     954/79 and the criteria in the Council Minutes but there should
     be no restrictions introduced which would be contrary to the
     non-discrimination provisions of the Treaty and Regulation
     954/79. The Commission made a proposal as part of its
     Communication of March 1985, "Progress towards a common
     transport policy (maritime transport)", but so far no
     discussion in depth on this proposal has taken place in the
     Counc iI.
 ---pagebreak---                             - 26 -
110. Also during the discussions on the proposal concerning the
     freedom to provide services which led to the adoption in
     December 1986 of Regulation 4055/86, some Member States
     supported the idea of a restriction of the beneficiaries to
     "Community shipping companies" which would be made subject to
     certain conditions, in particular, as to the capital and
     nationality of board members and even their use of ships flying
     the flag of a Member State. Only the last condition was partly
     and temporarily introduced in the phasing out of existing
     restrictions in the freedom to provide services.
111. The measures proposed in this Communication include proposals
     for the removal of cabotage restrictions and the promotion of
     the use of Community flag shipping for the transport of food
     aid. In this context, it is clearly right to consider again the
     joint definition of Community shipowners as the bénéficiaires
     of such measures, so as to ensure that these and other rights
     and benefits attached to Community shipownership accrue only to
     shipowners with a real and substantial presence in the
     Community. A proposal for a Regulation is at Annex 3.
112. The outcome might also facilitate the adoption of the 1985
     Commission proposal on the joint definition of a national
     shipping line. That proposal, although restricted to carriers
     to which the United Nations Convention on a Code of Conduct for
     Liner Conferences applies, also requires a real and substantial
     presence of shipowners in the Community. Its text may need
     adjustment, however, in the light of the present proposal and
     of developments since the adoption of Regulation 954/79.
     (7) REMOVAL OF CABOTAGE RESTRICTIONS
113. With the communication which it addressed to the Council in
     1985 on maritime transport, the Commission proposed the
     application of the principle of freedom to provide services to
     the sector (C0M(85)90, Annex II-2). In agreeing to the package
     of four Regulations In the field of maritime transport in
     December 1986, the Council did not find it possible to decide
     at that stage on the application of the principle of freedom to
     provide services in respect of shipping services within the
     Member States; it therefore agreed that further consideration
     of this part of the Commission proposal was necessary.
     No progress, however, has been achieved on the subject during
     the intervening interval of more than two years.
114.  In the context of measures being proposed with the aim of
     maintaining a more competitive Community fleet, with convergirg
     conditions of operation, through the instrument of a parallel
     Community register, the Commission considers it necessary to
     make progress with the application to Member States' internal
     maritime transport of the principle of the freedom to provide
     services, in view of the completion of the internal market by
     1993.
 ---pagebreak---                               - 27 -
115. In this context, the Commission considers appropriate that the
     removal of restrictions on the freedom to provide services in
     Member States' internal maritime transport In respect of
     nationals and maritime companies of the Member States should be
     accompanied by conditions in respect of the vessels used to
     provide the service, so as to ensure a degree of approximation
     of operating conditions, always taking also due account of the
     special requirements of certain public services of cabotage
     which the Member States make in the general interest. The
     Commission therefore proposes that removal of restrictions is
     subject to the use of vessels registered in the Community ship
     register and which operate in short-sea trades. A proposal for
     a Council regulation concerning the application to Member
     States' internal maritime transport of the freedom to provide
     services, which incorporates the above considerations and
     supersedes the earlier Commission proposal, Is at Annex 4.
     (8) CONSORTIA
116. During its meeting of 15/16 December 1986, the Council, when it
     reached agreement on the Competition Regulation, made a
     statement in which it invited the Commission to study inter
     alia the matter of consortia and if necessary to submit new
     proposals. The Commission undertook to submit a report to the
     Council, within one year from the date of adoption of the
     Regulation, on whether to provide for block exemptions for such
     agreements as consortia and to submit a proposal to that effect
     if necessary.
117. In January 1988 the Commission gave its interim report in which
     it concluded that so far no evidence had been made available
     which could justify a block exemption for consortia. From the
     content of the few agreements submitted to the Commission's
     services and subsequent soundings, it seems, however, that
     there are substantial differences between consortia, ranging
     from purely technical arrangements to closely knitted
     organisations with joint marketing. There seems to be three
     main categories of agreements:
         the technical agreement (exchange of slots, equipment, use
         of terminals)
         the operational agreement (joint scheduling, pooling of
         cargoes or revenues)
         the commercial agreement (notably joint marketing).
118. Whereas consortia which take the form of a technical
     arrangement only might be easily exempted (or in the framework
     of a block exemption excepted), the two other sorts of
     agreement could substantially restrict competition between the
     partners and as such be forbidden. Whether and, if so, how far
     a group exemption could be given for the two other sorts of
     agreements, and the conditions for such possible group
     exemption is not yet clear.
 ---pagebreak---                                     - 28 -
119.     The Commission is anxious to clarify the position of consortia
         and intends to make a report to the Council. As soon as it has
         received the necessary further information, it will give
         serious consideration to the possibility of granting a group
         exempt ion.
         (9) VAT AND EXCISE DUTIES RELATED TO SHIPPING SERVICES
120.     It is of course a generally shared concern (throughout the
         Commission) to succeed in creating a genuine single market and
         thus getting the economic as well as social benefits of it for
         Europe and its people. That is precisely the reason why the
         measures chosen to achieve this objective have to be carefully
         weighted against the actual operating conditions of a given
         economic activity, so as to avoid undesired adverse
         consequences.
121.     As regards fiscality the drive of the Community towards
         completing the internal market led the Commission to put
         forward in August 1987 a series of proposals on the removal of
         fiscal frontiers* 1 ). The measures envisaged would introduce
         considerable changes for the Community shipping industry. In
         particular,
             passenger fares on sea voyages within the Community would
             no longer benefit the transitional exemption granted under
             the 6th VAT directive* 2 ), and would be submitted to VAT
             rates from 4 to 9%; freight costs will be chargeable at the
             standard rate.
         -   within the Community VAT - and excise duties where
             appropriate - would be added for the first time to the
             supply of ships and ships' equipment, bunker fuel and a
             number of various shipping related activities where
              intracommunity voyages are concerned. (It is not however
             proposed to charge excise duties on bunker fuel).
         These changes would in turn cause rate increases in similar
         proportions, which would obviously put the Community shipping
         industry at disadvantage if the same charges are not also borne
         by their non-Community competitors insofar as they also provide
         services in intracommunity voyages.
 122.    Maritime transport being typically a world-scale operated sort
         of service and subject to a very strong international
         competition, the global fiscal principles at stake, whether on
         VAT or on excise duties, raise a number of complex issues of
         detail at the practical level to ensure equal treatment between
         Community and non-Community operators and to ensure there is no
         taxation on voyages to third countries. Balanced solutions
         will have to be worked out, also taking into account the
(1) COM(07)320 final and following, especially C0M(87) 322 and 324,
     August 1987.
(2) OJ L 145 of 13.6.1977.
 ---pagebreak---                                  - 29 -
        legitimate interests of an international trading sector which
        is of paramount importance for the Community in its economic
        and social as well as strategic aspects. This will have to be
        borne in mind in working out the detailed application of the
        Commission's fiscal proposals, in the light of the
        Communication of May 1989* 1 ) on the completion of the interna
        market and approximation of indirect taxes.
(1) CÔM (Ô9> 2ÔÔ
 ---pagebreak---                                                               ANNEX 1
                           Proposal for a
                      COUNCIL REGULATION
   establishing a Community ship register and providing for the
         flying of the Community flag by sea-going vessels
THE COUNCIL OF THE EUROPEAN COMMUNITIES,
Having regard to the Treaty establishing the European Economic
Community, and in particular Article 84(2) thereof,
Having regard to the proposal of the Commission,
Having regard to the opinion of the European Parliament,
Having regard to the opinion of the Economic and Social Committee,
Whereas shipping is an indispensable element in trade between the
Member States and between Member States and third countries;
Whereas the availability of a high quality and truly competitive fleet
depends, on the one hand, on the availability of a maritime
infrastructure within the Community including a reserve of nationals of
Member States to serve as seafarers and, on the other hand, a cost
level which is competitive;
Whereas the fleet flying Member States' flags has suffered a considerable
decline over the years         and to the extent that ships have been
transferred to third country registers, there has been a severe loss of
employment for Community nationals;
Whereas the efforts to meet the problem through national measures,
inter alia the establishment of second national registers, to which
more favourable conditions are attached, tend to disperse the effects
of the actions undertaken and risk a distortion of competition;
Whereas it is in the Community interest to aim at a structural
development of a fleet of vessels, registered in Member States
registers but also identifiable as ships serving Community needs,
which comply with the standards of the maritime conventions, and whose
crew includes as a minimum a specified number of trained seafarers from
Member States;
Whereas this aim cannot be attained without a reduction of the cost
level;
Whereas the Commission has developed guidelInes for the examination of
State aids to be given by the Member States to Community shipping
companies;
 ---pagebreak---                                   - 2 -
Whereas the establishment of a Community ship register should serve the
purpose of creating a channel through which national efforts can be
converged, a pool of Community seafarers and a trade mark guaranteeing
shippers a high quality service;
Whereas the Community ship register will be additional to the national
register;
Whereas the right to register vessels in the Community register should
be reserved for natural and legal persons having a certain link with
the Community; whereas, however, this right should also be given under
certain conditions to persons having a link with a given third country;
Whereas the vessel to be registered in the Community register should comply with
certain conditions; whereas, in particular, the vessel should be and
remain registered in a national register; whereas the decisions on the
admission to the national register must be taken in compliance with the
provisions of the Treaty,
Whereas registration in the Community register should depend on
compliance with the safety measures required by the international
conventions in this respect;
Whereas the number of trained seafarers from Member States on board of
vessels registered in this register should be sufficient to meet future
requirements of the Community fleet;
Whereas seafarers from non-Community countries on vessels registered in
this register should be employed on conditions in conformity with
 internationally agreed standards, unless otherwise mutually agreed with
their representative organisations;
Whereas a 11 seafarers on vessels registered in this register should at
 least benef t from the social security schemes to which they are entitled
 in the country where they are resident;
Whereas vessels, while remaining on this register, should be able to
transfer between the national registers of Member States without
technical hindrance, when they comply with the essential technical
requirements to be laid down by the Council;
Whereas the right of free movement under Article 48 of the Treaty as
 implemented by Council Regulation 1612/68 1 applies to employment of
nationals of Member States on board vessels registered in the Member
States; whereas therefore this right applies to vessels registered in
EUROS; whereas, however, the effective exercise of that right may be
hindered by differences between qualifications and licences issued in
the Member States; whereas it Is appropriate to provide for recognition
of such qualifications and licences for seafarers for the purposes of
employment on board vessels in the Community register subject to
minimum requirements laid down by the Council;
Whereas registration in this register should be reflected in the right
and obligation to fly the European Flag;
 1
   0J No L 257, 19.10.1968, p. 2.
 ---pagebreak---                                      - 3 -
Whereas the Commission should be enabled to adopt implementing provisions
concerning the establishment of the register and concerning procedures of
registration and deregistration;
Whereas there should be cooperation between the Community register and
the national ship registers, including an exchange of information;
Whereas the Member States should take the necessary measures to control
and enforce compliance with the provisions of this Regulation;
HAS ADOPTED THIS REGULATION:
                     SECTION 1 •: Scope of the Regulation
Article 1 - Objective
This Regulation provides for :
      the establishment of a Community ship register for sea-going
     merchant vessels ;
      the conditions for registration;
     certain facilities accruing from such registration;
      the right to fly the European flag on these vessels in addition to
      the national flag.
             SECTION 2 : The register, vessel owners and vessels
Article 2 :     Establishment of the register.
A Community ship register (hereafter called "EUROS") is hereby
established in which sea-going merchant vessels may be registered in
addition to their national registration in a Member State.
 The     Commission    shall   register    when   the   conditions laid
down in Articles 3, 4 and 5 are met. It shall deregister a vessel when
 it no longer conforms to the provisions of this Regulation.
Article 3 - Persons entitled to have a vessel registered in EUROS.
1)   The following may apply for registration of a vessel in EUROS :
   a)     nationals of the Member States established in a Member State
          and pursuing shipping activities ;
 ---pagebreak---                                    - 4-
  b)      a shipping company formed in accordance with the law of a
          Member State and having its principal place of business in, and
          effective control exercised within the Community, provided that
          the majority of the capital of that company is owned by
          nationals of the Member States or the majority of the board of
          the company consists of such nationals, who have their domicile
          or usual residence in the Community.
   c)     nationals of Member States established outside the Community or
          shipping companies established outside the Community and
          controlled by nationals of a Member State, if the vessels owned
          or operated by them are registered in that Member State in
          accordance with its legislation;
2)    For the purpose of this regulation, a natural or legal person meant
      in paragraph 1 will hereafter be referred to as a "Community vessel
      owner";
3)   Where it has been agreed between a third country and the Community
      that registration of vessels in each other's register shall be
      permitted, the term "nationals of the Member States" shall, for the
      purposes only of paragraph 1(a) and (b), include nationals of the
      third country concerned.
Article 4 - Vessels eligible for registration
Eligible for registration in EUROS Is any sea-going merchant vessel of
at least 500 grt, built or under construct Ion,which is already
registered in a Member State, and entitled to fly the flag of that
Member State and used or to be used in national or international trade
for the transport of cargo or passengers or any other commercial
purpose, if it fulfils the following conditions:
      a.  the vessel must be and remain registered in the national ship
          register for the duration of its registration in EUROS;
      b.  the vessel must be owned and for the duration of its
          registration in EUROS remain owned by a person entitled to
          register a vessel in EUROS, or operated by a Community vessel
          owner on the basis of a bare-boat charter in accordance with
          the provisions of Article 5;
      c.  the vessel shall not be more than 20 years old.
Article 5. -    Bare-boat charters
Vessels operated by Community vessel owners on the basis of a bare-boat
charter may be registered In EUROS during the period of that charter if
the following conditions are fulfilled:
1. the vessel is registered as a bare-boat chartered vessel in a
national ship register of a Member State;
 ---pagebreak---                                  - 5 -
2. the laws of the vessel's initial flag country allow bare-boat
registration in another country;
3. the consent of the owner of the vessel and of all mortgage
creditors for the registration of the bare-boat is obtained; and
4. the bare-boat charter is duly recorded in the register of the
vessel's initial flag country.
                  SECTION 3: Safety, manning and crew.
Article 6 - Safety.
Throughout the period of registration the vessel must be provided with
all certificates required by the Member State concerned.
Article 7 - Nationality of crew.
On vessels registered in EUROS all officers and at least half of the
rest of the crew shall be nationals of a Member State.
Trainees do not count towards meeting the requirements above.
Article 8 - Wages, working hours and further labour conditions.
Wages, working hours and further labour conditions of seafarers, who
are not nationals of a Member State, on board vessels registered in
EUROS, shall be in accordance with the ILO Wages, Hours of Work and
Manning (Sea) Recommendation (No 109), 1958, subject to any arrangement
on collective wages agreed upon with organisations as referred to in
Article 9.
Article 9 - Collective wage agreements
1. If Community vessel owners who have registered the vessels which
they own or operate In EUROS employ seafarers who are not nationals of
a Member State such seafarers may be employed only on the basis of
collective wage agreements concluded with trade unions or similar
organisations of the country where they are resident.
2.  No collective wage agreement may be concluded with a foreign trade
    union or similar organization on behalf of nationals of a third
    country if such trade union or organization does not satisfy the
    conditions of ILO Convention No. 87 concerning the freedom of
    association and protection of the right to organize.
 ---pagebreak---                                     - 6 -
3.    The law of the Member State of registration of the vessel or, if
      explicitly referred to in the agreement, any other Member State,
     shall apply to such collective wage agreements. The courts of the
      Member State concerned shall be competent to hear and determine
      disputes arising out of such agreements.
Article 10 - Social Security
Without prejudice to Article 13(2) (c) of Council Regulation (EEC) No 1408/71 and
unless otherwise mutually agreed at the level of governments or social
partners, social security for seafarers on board vessels registered in
EUROS shall be the responsibility of the country in which the seafarer
is resident unless the legislation of that country expressly provides
otherwise, in which case the Member State of registration shall be
responsible but in accordance with the legislation of the country of
residence.
For the purpose of this provision residence means residence on shore
and employment on board a vessel registered in a Member State shall not
of itself, be considered as being residence in that State.
Article 11
Articles 8, 9 and 10 shall apply subject to any right conferred or
obligations imposed by any other Community legislative act except where
such act expressly provides otherwise.
          SECTION 4: Facilities attached to registration in EUROS
Art icle 12 - Transfer of vessels
Any vessel registered in EUROS and having valid certificates and
classification and meeting the essential technical requirements to be
laid down by the Council according to the provisions of the Treaty
before 1 July 1991, may be transferred to the register of another
Member State without the imposition of additional technical
requirements.
Article 13 - Recognition of seafarers' qualifications
The qualifications and licences of seafarers who are nationals of a
Member State shall be recognised by the competent authorities of each
Member State for the purposes of employment on any vessel registered in
EUROS, subject to minimum requirements for professional training and
experience in the function concerned as required in Directives adopted
or to be adopted by the Council, according to the provisions of the
Treaty, before 1 July 1991.
               SECTION 5: European flag, port of registration
Art icle 14 - European flag
1.    Vessels registered in EUROS are entitled and obliged to fly the
      European flag in addition to their national flag.
 1
   0J No L 149, 5.7.1971, p. 2.
 ---pagebreak---                                    - 7 -
2.  Upon registration a certificate conveying the right to fly the
    European flag will be delivered by the Commission to the applicant
    for registration.
Article 15 - Port of registration
A vessel registered in EUROS shall bear a relevant identification on
its stern under the name of the port of registry in its national .
register.
                        SECTION 6: Final provisions
Article 16 - Implementing measures
The Commission shall, within six months after the adoption of this
regulation, adopt the necessary implementing measures concerning the
establishment of EUROS, the procedures for registration and
deregistration, the form and content of the documents concerned,
including the certificate concerning the right to fly the European
Flag, the form of, and rules governing the flying of, the flag, and the
identification of vessels on the register.
Article 17 - Cooperation
1.    National authorities and the Commission shall assist each other in
applying this Regulation and in checking compliance therewith.
2.   Within the framework of this mutual assistance they shall
communicate to each other the necessary information with respect to
registration and deregistration.
Article 18 - Transitional period
1. Member States shall, within six months after the adoption of this
Regulation and after consultation with the Commission, take the
necessary measures to:
         organise effective controls to ensure compliance with the
         requirements laid down in Sections 2, 3 and 5;
    -     impose sanctions in case of non-compliance with those
         requirements;
         enable vessels registered in EUROS to exercise the right to fly
         the European flag.
2.  Such measures shall    make express reference to this Regulation.
3. Member States shall forthwith communicate to the Commission the
measures adopted.
 ---pagebreak---                                  - 8 -
Article 19 - Entry into force
This Regulation shall enter into force on 1 January 1991.
This Regulation shall be binding in its entirety and directly
applicable in all Member States.
Done at Brussels,                        1989.
                                           For the CounciI
                                           The President
 ---pagebreak---                                                 ANNEX 2
                        COMMISSION R ECOMMENDATION
         on improving the effectiveness of Port State Control
                            in the Community
THE COMMISSION OF THE EUROPEAN COMMUNITIES,
Having regard to the Treaty establishing the European Economic
Community,
Whereas the safety of life at sea, acceptable standards of living and
working conditions on board ships and the protection of the marine
environment must be maintained and promoted;
Whereas the principal responsibility for the effective application of
these standards as laid down in international instruments rests upon
the relevant authorities of the State whose flag a ship is entitled to
fly;
Whereas effective action in the form of Port State Control is,
nevertheless, necessary to ensure proper application of these standards
in order to reduce and prevent substandard shipping;
Whereas all the maritime nations of the European Economic Community are
signatories of the Memorandum of Understanding on Port State Control;
Whereas it is essential that all international conventions under the
Memorandum of Understanding are duly signed and ratified by all Member
States;
Whereas correct application of the international conventions referred
to in the Memorandum of Understanding on Port State Control requires
uniform and effective checking by Member States who are signatories to
the aforesaid Memorandum;
Whereas it is necessary to ensure that the target number of inspections
on individual foreign merchant ships visiting the ports of signatories
to the Memorandum Is achieved in order to reduce and prevent
substandard shipping and in order to avoid distortions of conditions of
competition between ports within the Community;
Whereas for these purposes a full and uniform system of Port State
Control should be in force throughout the Community;
 ---pagebreak---                                    - 2 -
HEREBY RECOMMENDS THE MEMBER STATES to take the following measures in
pursuance of their obligations under the Memorandum of Understanding on
Port State Control (M.O.U.):
I.  WITH REGARD TO RATIFICATION OF THE INTERNATIONAL CONVENTIONS
     COVERED BY THE MEMORANDUM OF UNDERSTANDING
     1.  those Member States, which have not yet ratified the
         International Conventions cited below, to do so forthwith:
             the International Convention on Load Lines, 1966;
             the International Convention for the Safety of Life at Sea,
             1974, as amended by the Protocol of 1978;
             the International Convention for the Prevention of
             Pollution from Ships, 1973, as modified by the Protocol of
             1978;
             the International Convention on Standards of Training,
             Certification and Watchkeeping for Seafarers, 1978;
             the Convention on the International Regulations for
             Preventing Collisions at Sea, 1972;
             the Merchant Shipping (Minimum Standards) Convention, 1976
             (ILO Convention no. 147).
     2.  those Member States, which have not yet ratified the optional
         annexes to the International Convention for the Prevention of
         Pollution from Ships, 1973, as amended by the Protocol of 1978
         (MARPOL 73/78), to do so forthwith.
II. WITH REGARD TO THE IMPLEMENTATION OF THE INTERNATIONAL CONVENTIONS
     COVERED BY THE MEMORANDUM OF UNDERSTANDING
Member States, which are signatories to the Memorandum of
Understanding, to ensure that
     1.  a minimum annual total of 25% of the number of individual
         foreign merchant ships visiting their ports are inspected in
         accordance with the provisions of the Memorandum of
         Understanding;
     2.  the inspection procedures laid down in the Manual for Surveyors
         adopted by the Port State Control Committee are strictly
         applled;
     3.  adequate resources, both financial and manpower, are provided
         to ensure a full implementation of their obligations under the
         Memorandum of Understanding on Port State Control.
The Commission requests Member States to inform It within twelve months
of the adoption of the Recommendation of the measures they have taken
 in this field.
 ---pagebreak---                                                          ANNEX 3
                            Proposal for a
                       COUNCIL REGULATION
            on a common definition of a Community shipowner
THE COUNCIL OF THE EUROPEAN COMMUNITIES,
Having regard to the Treaty establishing the European Economic
Community, and in particular Article 84 (2) thereof,
Having regard to the proposal of the Commission,
Having regard to the opinion of the European Parliament,
Having regard to the opinion of the Economic and Social Committee,
Whereas the development of the single market makes it desirable to
affirm the identity of the Community also in the field of sea transport
services;
Whereas to an increasing degree Community legislation refers to
Community shipowners and there should be a common view on the identity
of such a shipowner;
Whereas it is desirable to distinguish between companies owned by
nationals of a third country or the majority of whose board consists of
nationals of such a country and those which are owned or managed by
Community nationals, taking into account that the former may themselves
have acquired the same status as companies of the Member States by
their establishment in a Member State;
Whereas such a distinction can be achieved by defining as Community
shipowners those nationals of a Member State who have a significant
economic link with a Member State;
HAS ADOPTED THIS REGULATION:
 ---pagebreak---                                    - 2 -
                                 Article 1
This Regulation lays down criteria establishing a common definition of
a Community shipowner.
                                 Article 2
Unless otherwise stated, all references to "Community shipowner", in
regulations, directives and decisions of the Council are to be
interpreted in accordance with Articles 3 and 4.
                                 Article 3
For the purpose of this Regulation "a shipowner" means:
a natural or legal person providing a liner or tramp service in the
field of maritime transport of passengers or goods by one or more sea-
going vessels which he or it owns or has chartered on the basis of a
bare-boat charter, time charter or voyage charter.
                                 Article 4
The following shipowners are regarded as Community shipowners
    1a  a national of a Member State, who has his domicile or usual
        residence in a Member State;
    1b  a shipping company or firm which is formed in accordance with
        the law of a Member State and which complies with the
        following requirements:
         i)  the principal place of business is situated and the
             effective control exercised in a Member State and
         ii) the executive board    consists  of persons the majority of
             whom are nationals of a Member State or the majority of the
             shares   are   owned by nationals of a Member State having
             their domicile or usual residence in a Member State.
    2a  a national of a Member State who has his domicile or usual
        residence outside the Community if his vessels are registered
         in that Member State in accordance with its legislation;
    2b  a shipping company or firm established outside the Community
        and controlled by nationals of a Member State if its vessels
        are registered in that Member State in accordance with its
         legislation.
 ---pagebreak---                                  - .3 -
                               Article 5
This Regulation shall enter into force on 1 January 1990,
This Regulation shall be binding in its entirety and directly
applicable in all Member States.
Done at Brussels                        1989
                                         For the CounciI
                                         The President
 ---pagebreak---                                                          ANNEX 4
                           Proposal for a
                      COUNCIL REGULATION
   applying the principle of freedom to provide services to maritime
                     transport within Member States
THE COUNCIL OF THE EUROPEAN COMMUNITIES,
Having regard to the Treaty establishing the European Economic
Community, and in particular Article 84 (2) thereof,
Having regard to the proposal of the Commission,
Having regard to the opinion of the European Parliament,
Having regard to the opinion of the Economic and Social Committee,
Whereas the principle of freedom to provide services does not yet apply
to maritime transport within the Member States;
Whereas it is important to adopt measures with the aim of progressively
establishing the internal market over a period expiring on 31 December
1992; whereas the internal market shall comprise an area without
internal frontiers in which the free movement of goods, persons,
services and capital is ensured;
                                      i
Whereas in accordance with Article 61 of the Treaty freedom to provide
services in the field of maritime transport is to be governed by the
provisions of the Title relating to transport;
Whereas the abolition of restrictions on the provision of maritime transport
services within Member States is necessary for the establishment of the
single market;
Whereas therefore the principle of freedom to provide services should
be applied to maritime transport within Member States;
Whereas this freedom should be subject to conditions in respect of the
vessels used to provide the services,so as to ensure a degree of
approximation of operating conditions among the persons and companies
providing such services;
Whereas such conditions are fulfilled by ships registered in the
Community ship register established by Council Regulation (EEC) No ...
and used in short-sea trades;
HAS ADOPTED THIS REGULATION:
 ---pagebreak---                                  - 2 -
                                Article 1
1. Restrictions on freedom to provide maritime transport services
   within Member States shall be abolished in respect of Community
   shipowners who are established in a Member State of the Community
   other than that of the person for whom the services are intended
   when using vessels registered in the Community ship register and
   not exceeding 6000 grt.
2. The provisions of this Regulation shall also apply to nationals of
   the Member States established outside the Community and to shipping
   companies established outside the Community and controlled by
   nationals of a Member State, if their vessels are registered in
   that Member State in accordance with its legislation and in the
   Community ship register and not exceeding 6000 grt.
3. For the purposes of this Regulation, services shall be considered
   as "maritime transport services" where they are normally provided
   for remuneration and shall in particular include:
   (a) the carriage of passengers or goods by sea between ports in any
        one Member State, including overseas departments of that State
        (cabotage);
   (b) the carriage of passengers or goods by sea between any port in
        a Member State and installations or structures on the
        continental shelf of that Member State (off-shore supply
        services).
4. The Member State between whose ports the maritime transport
   services are provided may require that the vessels used for these
   services are manned with nationals of the Member States to the same
   degree as is required in respect of the vessels flying its own flag
   which are used for these services.
                                Article 2
1. Notwithstanding     Article 1(1) and (2), a Member State may,
   where necessary in order to maintain sufficient maritime transport
   services in the case of cabotage between the mainland and its
    islands and between its islands,impose public service obligations
   as a condition for the right to provide the service.
2. For the purpose of      this     Regulation the law, regulations or
   administrative conditions imposed by Member States aiming to
   guarantee the continuity, regularity and efficiency of the
   services, and the provision of goods of fundamental importance for
   the economic we 11 being of such territories shall be considered as
   public service obligations.
 ---pagebreak---                               - 3 -
                           Article 3
Articles 55 to 58 and 62 of the Treaty shall apply to the matters
covered by this Regulation.
                           Article 4
Without prejudice to the provisions of the Treaty relating to the
right of establishment, a person providing a maritime transport
service may, in order to do so, temporarily pursue his activity in
the Member State where the service is provided, under the same
conditions as are imposed by that State on its own nationals.
                            Article 5
Member States shall, before adopting laws, regulations or
administrative provisions in implementation of Article 2 consult
the Commission. They shall send to the latter any such measures so
adopted.
                            Article 6
This Regulation shall be reviewed before 1 January 1993.
                            Article 7
This Regulation shall enter into force on 1 January 1991.
This regulation shall be binding in its entirety and directly
applicable in all Member States.
Done at Brussels,                                      For the Council
                                                         The President
 ---pagebreak---                                                   ANNEX 5
                         MANNING COSTS
The following table presents the results of a calculation of
the relative importance of manning costs as part of total
operating costs, provided in "A Social Survey in Maritime
Transport- (MERC-1987) for a 1500 TEU container vessel.
Manning costs include basic wages, overtime, leave pay,
social security contributions, retirement provisions, crew
rotation, travel and victualling.
Operating costs consist of manning, repair and maintenance,
stores, lubrication oil, insurance and overhead.
Daily manning and operating cost compared (in USD)
         (1500 TEU VESSEL - October 1986)
           Cost Item    Crew    Manning Operating      1/2
 Country                Sise    cost (1) cost (2)      (%)
 Belgium                 22       3586     6654        54%
 Denmark                 21       3228     6414        50%
 Prance                  23       4030     7177        56%
 W. Germany              21       3527     6679        53%
 Greece                  21       1296     4034        32%
 Ireland                 NA        NA       NA         NA
 Italy                   21       4070     7113        57%
 Netherlands             24       3623     6715        54%
 Portugal                30       1352     4056        33%
 Spain                   25       2952     5913        50%
 UK                      24       2817     5741        49%
SOURCE: "A Social survey in Maritime Transport" by MERC -
          1987
 ---pagebreak---                                              - 2 -
    Tin» significant d i f f e r e n c e s in manning costs within the
    Community are illustrated in the following graph which
    translates the relevant data of the above table into annual
    manning c o s t s .
                                        MANNING COSTS
                                          US % I YEAR
i.too.ooo
                                                   1.4SS.SS0
1.400.000
          1.30S 0»O
                            1.2H.3SS
1.700 000
                                                                  1.077.4*0
                                                                            1.02S.20S
1.000.000
  •00.000
  •00.000
                                       473.040
  400 000
  230.000
                                               ^   \
 ---pagebreak---                              - 3 -
The following table from the "Social Survey" illustrates the
relative weight of manning costs and other cost components
in the overall cost, as calculated in 1986 for a newly built
Dutch 1500 TEU container vessel.
Manning costs in the overall cost environment
(Dutch 1500 TEU container vessel, newly built)
  Cost        USD       %
  Item        (mln)
  Manning     1.286    21.1
  R&M         0.424     6.9
  Stores      0.098     1.6
  Lub. Oil    0.108      1.8
  Insurance   0.251     4.1
  Overhead    0.217     3.6
  Fuel        1.196    19.6
  Capital     2.519    41.3
  Total       6.097   100%
            I       I
 ---pagebreak---                                                      ANNEX 6
                S T A T I S T I C A L    ANNEX
Table 1  Merchant fleet of the world 1970-1988
Table 2  Development of world seaborne trade 1975-1988
Graph 1  Cargo carried by world fleet 1965-1988
Graph 2  Ton-Miles performed by world fleet 1965-1988
Table 3  Merchant fleets - analysis by Community ship register
Table 4  Development of EEC national fleets and EEC owned fleets
         under the flag of open register countries between 1981 and
         1987
Table 5  Distribution of World merchant fleets by category of
         vessels and flag - 1988
Table 6
Table 7  Development of world container fleets - 1981 and 1987
Table 8  Merchant fleets: Age comparison by percentage share of
         total dwt - 1986
Table 9  Personnel employed In Member States' fleets: by nationality
         (1980. 1986-1968)
Table 10 Structure of costs for selected vessels
 ---pagebreak---                                 TABLE 1 : MERCHANT FLEET OF THE WORLD 1970-1988 (1)
 TEARS
              en         C D        EEC
                                           (2)           (3)
                                               OPEN REGISTRT  COMECON
                                                                      (A)
                                                                            OTHERS
                                                                                           o u t of which:
         WORLD
                   (io&   EEC)                   COUNTRIES                             WIC» <5)      China(PR), Israel
                                                                                                     South Africa
         MGRT       MGRT   X      MGRT   X       MGRT    X   MGRT         MGRT      X  MGRT            MGRT I      X
 Trnr     ff
         nrrr     TTT7T   TTT    "TT7 727T -ÏÏÏ7T Ttt        T37Ô    T7T  T77J  -rrr
    5    325*6     193.8  59.5   100.4  30.8     84.2  25.9  17.7     5.5 29.9     9.2   7.0    2.1     3.6       1.1
    9    393.0     208.5  53.0   116.6  29.7    107.7  27.4  22.7     5.8 54.1   13.8   14.8    3.8     7.2       1.8
 1980    398.8     210.5  52.8   117.2  29.4    108.0  27. 1 23.2     5.8 57.1   14.3  15 .2    3.8               1.9
                                                                                                        7.6
         399.7     209.4  52.4   116.1  29.0    104.8  26.2  25.5     6.4 60.0   15.0   15.9    4.0               2. 1
                   205.3  50.9   110.6                 26.4
                                                                                                        8.5
         403.0                          27.4    106.3        23.9     5.9 67.5   16.7   17.8    4.4     9.0       2.2
         400.0     193.0  48.3   101.4  25.4    108.1  27.0  24.7     6.2 74.2   18.6  20.0     5.0               2.4
                   180.4          92.7
                                                                                                        9.7
         396*0            45.6          23.4    111.3  28.1  24.9     6.3 79.4   20.0  22.3     5.6               2.6
                                                                                                       10.1
         392.9     169.5  43.1    84.5  21.5    114.2  29.1  25.4    6.5  83.8   21.3  24.1     6.1               2.9
                   150.5  39.5    74.0                 30.5                            25.1
                                                                                                       11.2       3.2
         381.4                          19.4    116.5        25.8    6.7  88.6   23.2           6.6    12.1
         379.6     133.7  35.2    63.2  16.6    126.9  33.4  26.2    6.9  92.8   24.5  26.1     6.9               3.4
                          33.8
                                                                                                       12.8
         378.9     128.1          58.5  15.4    132.5  35.0  26.3    6.9  92.0   24.3  25.8     6.8               3.5
L                                                                                                      13.3
SOURCE: EUR08TAT Statistical Yearbook - Transport» Communications, Tourism and Lloyds Statistical Tables
         • MGRTI million gross registered tons - all ships of 100 GRT and over
         • X    s percentage of world total
(1) Merchant fleets excluding the fishing fleet, tugs, dredgers. Icebreakers, research ships, supply ships
      and tenders, miscellaneous
(2) Figures 1er EEC are for the "12". UK, DK, IRL joined EEC in 1973, GR in 1981, E and P in 1986, but the tonna
      figurée have jbeen included from 1970 onvarde for statistical reasons
(3) Antigua» lésâmes, Bermuda, Cayman Isles, Cyprus, Gibraltar, Lebanon, Liberia, Malta, Panama, St. Vincent,
      Vanuatu. (Figures for the years to 1983 provided in COM(85)90 are not directly comparable as a result of
      reclassification of a number of countries)
(4) Socialist countries of Eastern Europe: Albania, Bulgaria, Czechoslovakia, DRG, Hungary, Poland, Romania,
      USSR.
(5) Newly Industrialised Countries of the Far East: Rep. of China, Hong Kong, Singapore and South Korea.
 ---pagebreak---                                               TABLE 2 :  WORLD SEABORNE TRADE. 1977-1988
                                                                                                                                in million tonnas
                TOTAL TRAOE          CRUDE OIL          OIL PRODUCTS            IRON ORE             COAL                 GRAIN             OTHERS
                  ESTIMATE                                                                                                                 ESTIMATE
1977                  399               1  451               273                  276                  132                  147               1  120
1978                  466               1  432               270                  278                  127                  169               1  190
1979                  714               1  497               279                  327                  159                  182               1  270
1980                  606               1  320               276                  314                 188                   198              1   310
1981                  461               1  170               267                  303                 210                  206               1   305
1982                  199                 993                285                  273                 208                  200               1   240
1983                  090                 930                282                  257                 197                   199              1   225
1984                  292                 930                297                  306                 232                  207               1   320
1985                  293                 871                288                  321                 272                   181              1   360
1986                  385                 958                305                  311                 276                   165              1   370
1987                  4S7                 970                309                  309                 283                   186              1   390
1988 (estimate)       666              1 050                 315                  345                 298                   188              1   470
                                                                                                                  in thousand million tonne-miles
                TOTAL TRAOE          CRUDE OIL          OIL PRODUCTS           IRON ORE             COAL                  GRAIN             OTHERS
                  ESTIMATE                                                                                                                 ESTIMATE
1977               17 453             10  408                995               1  386                 643                  801                  220
1978               16 934              9  561                985               1  384                 604                  945                  455
1979               17 513              9  452              1 045               1  599                 786               1  026                  605
1980               16 611              8  219              1 020               1  613                 952               1  087                  720
1981               15 662              7  193              1 000               1  508              1  120               1  131                  710
1982               13 499              5  212              1 070               1  443              1  094               1  120                  560
1983               12 580              4  478              1 080               1  320              1  057               1  135                  510
1984               13 426              4  506              1 140               1  631              1  270               1  157                  720
1985               13 065              4  007              1 150               1  675              1  479               1  004                  750
1986               13 856              4  640              1 265               1  671              1  586                  914                  780
1987               14 273              4  671              1 320               1  728              1  653               1  061                  840
1988 (estimate)    15 170              5  080              1 350               1  870              1  740               1  070                  060
NOTE: Atttntion is drawn to the figures for grain which include sorghum and soya beans (in addition to wheat, maize, barley, oats and rye) for the
       entire period.
SOURCE: Fearnleys. Oslo. Review 1988
 ---pagebreak--- GRAPH 1       :
Cargo carried by world fleet 1965-1988
  GRAPH 2       :
  Ton-miles performed by world fleet 1965-1988
Bill.ton-eiles
 18  T
         D Crude          B Other          G Grain           QCoal Q Iron ore Oil
            oil              cargo                                            products
    Source: JSL Sreaen. oasetf on data fora Fearnleys Review
 ---pagebreak---              TABLE 3 l MERCHAR FLEETS (1) - ANALYSIS BY COHHIMITT SHIP REGISTERS (2)
             1975            1980          1984         1985         1986         1987         1988
FLAC
        M* of    MGRT B # of HGRT M* of       MGRT N* of   MGRT N* of   MGRT  N* of  MGRT N* of   MGRT
        ships            ships         ships        ships        ships        ships        ships
B.          99      1.3    105     1.7   125    2.3   124    2.3   117    2.3   112    2.1   103    1.9
DK         950      4.3    746     5.2   643    5.1   607    4.8   575    4.5   588    4.6   549    4.2
ft         562     10.4    465    11.6   405    8.6   381    7.9   415    5.6   315    4.1   291    4.2
FRC.     1578       8.2 1492       8.0 1424     6.0 1447     5.9 1410     5.3 1099     4.1   923    3.7
C*V      2561      22.4 3634     39.4 2673     34.9  2353   30.9  1995   28.3  1679   23.4  1584   21.8
IlLe        51      0.2     63     0.2    69    0.2    67    0.2    69    0.1    64    0.1    66    0.1
         1222       9.9 1154     10.9    978    9.0   956    8.6   947    7.6   943    7.6   930    7.4
It.
           802      5.4    690     5.3   635    4.0   630    3.7   644    3.8   620    3.4   565    3.2
10*.
           169      1.1    121     1.2   109    1.4   112    1.3   100    1.0    77    0.9    76    0.9
PORT.
                           817     7.5   765    6.4   740    5.6   674    4.9   609    4.4   554    3.8
SP.        804      4.8
                                 26.1   1216   14.9  1135   13.3  1026   10.6   916    7.5   871    7.2
UK.      2246      32.2 1931
                                               92.8 8552    84.5  7972   74.0  7022   63.2 6512    58.5
BEG 11 11044      100*2 11218   117.1 9042
Source t Lloyd's Register of Shipping, Statistical Tables
(I) t Itorchant fleet excluding fl.hlng vessel., tug., dredger.. Ice-breaker.. re.e«rch ve..el..
       ...nnl« ahln. tender, and atecellaneous• Vessel. 100 CRT and over.
 (J) . E « . Y l £ r e . inclua. various -second" register, e.g. the L i e of M.n and Kerguelen I.laod.
 ---pagebreak---                                                                                                                         TABLE 4
DEVELOPMENT OF EEC NATIONAL FLAG FLEETS AMD EEC OWNED FLEETS UNDER THE FLAG OF OPEN REGISTRY COUNTRIES BETWEEN
                                     1981 AND 1987 (Vessels of 500 t.DWT and over)
                              NATIONAL F U G                                                    OPEN REGISTRY FLEET
                        National Flag - 1000 DWT                                         Beneficial ownership - 1000 DWT
  M.S.     TANKERS        BULK              OTHERS               TOTAL         TANKERS           BULK         OTHERS            TOTAL
                        CARRIERS                                                              CARRIERS
         1981   1987   1981   1987     1981     1987         1981     1987   1981     1987   1981    1987    1981   1987     1981     1987
  B.       500    382   1581    2508     867       764       2948     3654      -      -      19       101     26    123        45      224
  DK      4851   4554    883     456    2244     1951       7978      6961         8    81     593     285    123    504       724     870
  FRG     5146    569   2671     618    4592     4472 12409           5659     2398 2150      1518   2655   1858   2535      5774     7340
  FR     14684   4844   2695   1493     2730     2070 20112          8407       884 1231       219      88    147    450     1258     1768
  GR     26976  18540 31122   19287 15425        4949     73513     42776    14845 19245      4875 19614    2866   6296    22586    45155
                                                        ... T..., ,
                                                                                                                 J
  IRL       23     27    239     -         76 !    136 1      342      163                     -      -        10     28        10       28
                                                                                '      *
  IT      8221   4765   6778   4954      -       2459     17429     12178       987   192      917    166    291    345     2195       703
  NL      4410   1278    963     551   3226     3294       8599      5123     1529    623       51    513    902    869     2483     2004
 PORT     1449   1005    193    477      539      221      2181      1703        33    32       54     89     20      90      107     211
  SP      9303   4352  2168    1958    1630     2077     13101       8387         0      6      76    143     90    113      166      262
 UK     22848    5083 11036    2675    7388     3918 41272          11676     1906   2731     451 1723       786 1222       3140     5676
 EEC    98414 45399   60329  34997 41141       26311 199884 106687          22590 26292      8773 25375    7122 12577     38485    64244
 WORLD 335464 245492 199452 231802 162272 163470 6971881640764             111510 93787     56558 77782 29629 44973 197697 216382
Sources: OECD and UNCTAD
 ---pagebreak---             TABLE !> : DISTRIBUTION OF WORLD MERCHANT FLEETS BY CATEGORY OF VESSEL AND FLAG - 1988 (1)
                                                     of which :                (2)            (3)
                                 WORLD     O E C D          EEC            OR         COMECON      OTHERS
                                 MGRT    MGRT      Z      MGRT    Z   MGRT     Z    MGRT    Z     MGRT     Z
 Oil & oil/chemical &           127.9    45.5     35.6   21.3   16.6  55.4    43.3   5.5   4.3    21.5    16.8
 miscellaneous tankers
 Chemical tankers                 3.5     1.4     39.5    0.5   14.2   1.4    39.2   0.0   0.6     0.7    20.0
 Liquified gas carriers           9.8     4.9     50.5    1.0   10.2   2.5    25.4   0.2   2.0     2.2    22.4
 TOTAL TANKERS                  141.2    51.8     36.7   22.8   16.1  59.3    42.0   5.7   4.0    24.4    17.2
 Ore/Bulk/oil carriers           20.0     5.2     26.0    2.8   14.0  10.0    49.8   0.9   4.4     3.9    19.5
 Ore & bulk carriers            109.6    31.9     29.1   15.1   13.7  37.6    34.3   7.2   6.6    32.9    30.0
 TOTAL BULK CARRIERS            129.6    37.1     28.6   17.9   13.8  47.6   36.7    8.1   6.3    36.8    28.3
 General cargo                   71.9    19.8     27.6    8.6   11.9  17.8   24.8   11.3  15.7    23.0    31.9
 Containers (Fully Cellular)     22.1    11.4     51.5    5.9   26.7   4.3   19.6    0.9   4.0     5.5    24.8
 Passenger, ferries, vehicle
 carriers & other merchant                                             3.6   25.4
 vessels                         14.2     7.9     55.9                               0.8   5.6     1.9    13.4
                                                          3.2   22.5
 TOTAL GENERAL CARGO AND
 OTHER MERCHANT VESSELS                                               25.7   23.8
                                108.2    39.1     36.1   17.7   16.3                13.0  12.0    30.4   28.0
 TOTAL ALL SHIPS                378.9   128.1     33.8   58.5   15.4 132.5   35.0   26.7   7.0    91.6   24.2
Source; Lloyd's Register of shipping - Statistical Tables 1988
         • MGRT: million gross registered tons - all ships of 100 GRT and over
         • Z   : percentage of world total
(1)  Merchant fleet: excluding the fishing fleet, tugs, dredgers, icebreakers, research ships, supply ships
     and tenders, miscellaneous
(2)  Open registry countries: Antigua, Bahamas, Bermuda, Cayman Isles, Cyprus, Gibraltar, Lebanon, Liberia,
     Malta, Panama, St Vincent, Vanuatu
(3)  Socialist countries of Eastern Europe: Albania, Bulgaria, Czechoslovakia, DRG, Hungary, Poland,
     Romania,USSR.
 ---pagebreak---  UCKLD MERCHANT KLE£f;                                   S h i p , o f 1ÛO gross tonnage and upward
 GROUP OF FLAGS: EEC                                     by p r i n c i p a l type*
                                                         In 1000 gross tonnage
 FLAG           GRAND       on.     fonyaeacAL  CHMCAL JLIÇLEFIED             BULMHL | 0 R E * B I X     TOTAL     GENERAL CONTAINER PASSENGER     TOTAL
   &            TOTAL    ITANKERS     TANKERS  [TANKERS teAS CARRIERS CARRIERS CARRIERS                TANKERS 4 CARGO SHIPS sarps    PERRIES & GENERAL CARGO
 YEAR                                                                                                    BILK                         OTHER     & PASSENGER
                   1                      3(*)                                                             8
                (B+L2)
                                                                                                                                  10     U(**)       12
                                                                                                       (2 to 7)                                   (9 to 11)
 BELCTLM 1970        974        305                                                           318           623        351                             351
            75     L29S         367                                                                         914        302         31
                                                                                              547                                         49           382
            80     1696         294                 76            78                                       1215
                                                                                              767                      323       HI       47           481
            85     2251         108     124         76          140               203       1157           1813        162       227      49           438
            86     2253         115     151           4         15S               208       1207           1843        139       228      43           410
            87     2097         117     107           4         157               295       1055           1735        134       176      51           362
            88     1928         118     134           6         150               293         872          1573        106       200      47           355
DENMARK 1970       3012       1340                    7           17                         445           1809      1187          16                1203
            75     4332       2161                    5           30                          552         2748       1169        179     236         1584
            80     5210       2807                    5           50                         639          3501        973        492     244         1709
            85     4766      2048       ISO           8         142                          423          2771        754        986     255         1995
            86     4464       1830      214           2         144                          290          2480        680       1030     274         1964
            87     4612       1740      427           7           98             251        2523            725      1044        320    2069
            88     4229      1576       478         11            94                                      2322         566      1007     334         1907
                                                                                              163
 FRAfCE 1970       5907      3477                     S           86               77        655          4300       1397          27    163         1607
            75   10390       6938                   62          241              638                      8647       1392        139     212         1743
                                                                                             768
            80   11557       7777                   50          322              609                      9689       1279        410     179         1868
                                                                                             931
            85     7886      4332        14         52                           388                      6069        960        673     184         1817
                                                                271                         1012
            86     5633      2589        14         24                           132                      3843        880        706     202         1790
                                                                258                          826
            87     5063      2451        23         24                           132                      3583        668        634     178         1479
                                                                227                          726
            88     4204      1934        25         14                                       698          2855        617        360     172         1349
                                                                184
GERMANT 1970       7519      1643                   10                             54                     3154       4099        162     104         4365
                                                                    6                       1441
            75               2725                     9           23              123       2078          4958       2485        638     149         3272
                   8230
            80               2757                                                  42                     4485       2121                174
                   8007                   :         18            30                        1638                                1227
                                                                                                                                         181
                                                                                                                                                     3522
            85     5925       1241      152         76          197                90        678          2434       1759       1551                 3491
            86                 593                  72          216                90        469          1597       1798       1757     187
                   5339                 157                                                                                                          3742
            87                 155                  46          141                                         905      1300       1713     195
                   4112                 161                                        90        312                                                     3307
            88                 105      161                     125                                         775      1100       1652     199
                   3726                             40                           163         176                                                     2951
GREECE 1970                  3872                                  8                        2032          6064       4451                123
                 10638                                                           152                                                                 4574
            75               8295                   1             17                        5957         15485       6321          35    606
                 22449                                                          1215                                                                 6964
            80                                                                                           28176      10433                729
                 39376      11780                   8             33            2741       13614                                   38               11200
            85                                                                                                                           617
                 30895       9276        90         3             66            2149       13173         24759       3416        103                 6136
            86                                                                                                                           613
                 28256      10235        24         3             63            1423       11779         23527       3974        142                 4729
            87                                                                                                                           588
                 23403       9125       143         3             63            1016        9540         19890       2755        169                 35L2
            88                                                                                                                           687
                 21815       8380       134         S             62              983       9077         18641       2287        201                 3175
 IRELAND 1970        152          3                                                            82             85        66          1                   67
            75       198          6                   1                                       148            155        16          7      20           43
            80       183          7                   3                                       101            111        42          5      30           77
            85       167          5      4                                                     57             66        40         18     43           101
            86       121          4       4                                                                    8         52        18      43          113
            87       123          4       15                                                                  19         52        18      33          104
            88       129          3       19                                                                  22         59        IS      33          107
 ITALY    1970     7023       2721        »         40          116               492       1597           4966      1471                586         2057
            75     9928       4061        I         25          148             1554        2006           7794      1144          97    893         2134
            80    10861       4685        :         70          204             1612        2302           8873      1056         208    724          1938
            85     8588       3579        22        94          175               905       2136           6911        814        269    394         1677
            86     7631       2513        48       111          187               932       2127           3918        889        247    377         1713
            87     7516       2732        93       110          192               980       18L3           3754        960        252    394         1806
            88     7395       2587        99       120          187             1017        1543           5553        975        251    616         1842
 NEDERL 1970       4989       1985        :         18            23               45         437          2508      2358           9    114         2481
            75     5414       2637        :         13            58                          SOB          3216      1868         154    176         2193
            80      5341      2509        i         20            64                          654          3241      1584         380    136         2100
            85     3650         553     192         43            61                          699          1348      1356        574     172         2102
            86                  667     264         74            62                          524          1591      1486        $47     196         2229
            87                 499      277         66            43                          318          1203      1425        327     232         2184
            88     3195        369      248         58            28                          295           998      1380        579     236         2197
 PORTUGAL 1970       721        248       :                         4                          11           263        373                85           458
            75     1054         516       t           5             4                          73           S98        392          6     SB           456
            80     1208        775        :           6             4                          73           858        329          6      IS          350
            85     1291        860                    6             2                         158          1026        238          9      18          265
                     m         m                      I             i                         m             m          HI
                                                                                                                        58
                                                                                                                                    ?
                                                                                                                                    7     31
                                                                                                                                                       «
                                                                                                                                                        96
            88       855       486                    6                                       267           759
          1970                                        2           67                                       1762      1054           9     39         1102
 SBUN              2864       1423        :                                                   270
                                                                                                                                         174         1183
            75     4846       2556        :           2           52              261         792          3663        977         32
            80                                      35            56              256                                1141          39    137         1337
                   7495    • 4818         t                                                   993          6158
            83                                      92            69              128                                1002         139    159         1300
                   5688       2874        32                                                1193           4388
            86                                      91            69              117                                  886        117    133         1156
                   4862       2350        21                                                toss           3706
            87                                      96            69              117                                  781        104    141         1025
                   4364                   32                                                               3339
                              2083
                                                                                  117         943                                  91    132           882
            86     3778                   26        90            74                                       2896        659
                              1601                                                            988                                 377     733         8656
          1970    24690                   t
                                                     55            97             365                     16034       7324
 UK                         12032                                                            3485                                1347     653         7086
            75                             t       170          703              2918                     23076       4886
                  32162      16096                                                           318»                                1672                 5435
            80                                     165         1052              2349                     20668       3030                733
                  26103      13230                                                           3872                                                     3554
             85                          147       140           717               870                      9808      1339       1322     693
                  13362       5790                                                           2144                                                     3210
             86                           92       133           708               514                      7386      1123       1419
                  10596       4303                                                           1636
             87                           92       130           144               312                      4592        864      1354     705         2924
                    7516       2732                                                          1181
                                           71      120            1*4              242                      4384        614      1335     702         2851
                    7235       2764                                                          1043
(*) includes Miscellaneous tankers
(**) Includes pamisjir/cargo ships; vehicle carriers, ferries and                      vessels; and ltwettodr carriers
 ---pagebreak---                                          TABLE 7
   Percentage shares in the world's container fleet
                   ID 1981 and 1987
                              1981                1987
 OECD                         71.2                55.3
 Open registry                  7.5               17.5
 Eastern Bloc                   2.8                 3.8
 Market economy
  developing countries        14.6                18.1
 •Others (PRC, Taiwan,
  Bermuda, Gibraltar,
  Israel, South
  Africa)                       3.9                 5.3
  Development of the container fleets of Hong Kong and
                        Taiwan
                               1981            1987
                           No.      GRT     No.      GRT
HONG KONG
- own flag                  21    380.000   21      437.000
- open registry                             51   1.000.000
TAIWAN
- own flag                  13    296.000   57   1.405.000
                                            39   1.115.000
- open registry
 ---pagebreak---        SzWaCBeNtYUESS : ÉŒ 0QARI9QN BY PEKZNEœ SH&W CF 1 0 m WT -1986
       ""  (Ships of 300 grt/gt and over)
                          0-4 YEARS 5-9 YEARS 10-14 YEARS 15-19 YEARS 20-24 YEARS 25 and above
OBCD                         17.3        23.1     38.0       13.7         3.6         4.3
EEC                          14.0        20.2     43.1       15.3      .  4.3         3.0
Denmark                      23.9        20.8     48.4        5.0         1.5         5.0
Irenes                       11.2        15.7     67.7        4.0         1.1         0.3
GensnyfR                     38.3        33.2     14.4       11.2         2.1         0.8
Greece                       11.3        15.3     43.0       21.3         5.3         3.8
Italy                         4.8        12.5     46.7       19.9         7.0         9.1
S)psin                        8.2       25.5      50.0       13.3         1.6         1.5
OK                            6.2       27.6      47.3       11.3         6.1         1.6
OMSXN                        13.0       24.6      25.4       15.4        15.6         6.0
Developing countries         18.0       20.9      35.2      17.3          5.1         3.6
Open registry                14.1       16.1      47.4      17.4          3.6        1.4
SOUVZ: ISL Bremen and Ilojds Register of Shipping
 ---pagebreak---                   TABLE 9;   PERSONNEL EMPLOYED IN M.S. FLEETS : BT NATIONALITY (1980, 1986» 1988)
Member               OWN                            OTHER                          OTHER                             TOTAL
State             NATIONALS                         OECD
          1980     1986     1987   1988   1980    1986     1987 1988    1980    1986     1987  1988   1980     1986     1987 1988
B.        2526    2332      2162   2016  636       474     457   428     142    122       101    95   3304   2928      2720    2539
DK       11975    8846      8028   7214  670       305     243   277    2037    628       538  419 14682      9779      8809   7940
FR       14947+   6695      6038    ..      4+        2       1   ..     203+   110        84   ••   15154+   6807      6123     ••
GER.     20894   16301     13284  11816 3750      4169 *  3389* 3261*   2397   4169 *   3389* 3261* 27041   20470     16673   15077
GR.      52518   28791**    ..      ..  1074 (1) 3143***   ••     ..   25867   3143***    ..    ••  79459   31934***     ••     ••
IRL.      1990     794       861   .•     10       249     105    ..        2    34        14  ••     2002   1077        980    ••
IT.      54700** 29753     25959 25237     -        -         -    -      -        -       -    -
                                                                                                     54700 29753      25959  25237
NL.       6139   10071      8099   7098 1863      4147 *  3063* 2582*   1910   4147 *   3063* 2582*   9912  14218     11162    9680
PORT.     5856+   2913+     2201   1790    -        -       -      -        -    -          -   -     5856+  2113      2201    1790
SP.      22928   19873     14701  12977    -        -       -      -        -    -          -   -   22928   19873     14701  12977
                                        13411+*   5211+* 5434*    ..   13411* 5211**    5434*  ..   72061+ 30019     28772      ••
UK.      58650* 28980+    24808    ..
      Source : OECD
      *    all non-nationals together
      +    previous year's figures
       ..  no information available
      (1)  Portuguese only
      **   estimate (ISL, Shipping statistics yearbook 1988)
      ***  As at 20th September 1986
 ---pagebreak---                                      TABLE 1 0 : STRUCTURE OF COSTS FOR SELECTED VESSELS
 Country   Vessel    Age                          Total Costs (Percentages)
                   (Year)
                           Net salary   Taxes      Depreciation Interest     Fuel Insurance Repairs/    Overheads Others
                                        on wages                                            Maintenance
 UK      Container   1         7.0         2.3          58.3       17.6       9.6     1.4       1.1        1.4      1.4
 M          •s
                     5        11.7         3.8          30.9       20.3      16.1     2.4      10.1        2.4      2.4
 Norway  Bulker      1        24.2         5.1          37.0        9.9      11.1     0.9       3.6        3.8      4.4
                     5        27.5         5.8          13.3       21.7      12.6     1.0       8.6        3.8      5.6
                    12        37.9         8.0           2.5        4.6      17.3     1.4      15.3        6.0      7.0
                                                      Operational Costs only
 Ireland Container            23.8        14.4                              39.8      5.9       4.7        5.8      5.8
 Italy   Bulker               41.5        13.7                              20.9      1.7       6.8        7.2      8.4
Source: KPMG Peat Marwick Treuhand Gmbh
 ---pagebreak---  ---pagebreak---  ---pagebreak---                                                                      ISSN 0254-1475
                                                              COM (89) 266 final
                                                      DOCUMENTS
EN                                                                              07
                                 Catalogue number : CB-CO-89-332-EN-C
                                                             ISBN 92-77-52263-1
Office for Official Publications of the European Communities
L-2985 Luxembourg