paid their contribution or have insufficient allowances to surrender.

89. **Rules would be needed, for instance, for the adjustment of rates or quantities** and to address disputes as to their application. On the tax side, the closest parallel is with excise and VAT arrangements in the EU. These, as noted, are specified mainly in terms of minimum rates. Experience is that the requirement of unanimity has made these very difficult to change, and that the unwillingness of Member States to rely on implementation by others has indeed hindered the development of the VAT. Experience with the EU-ETS is, perhaps, more encouraging. Under a global regime for international shipping, many of these governance issues may be easier to overcome to the extent that countries are content to have decisions made in appropriate bodies established under the new treaty instrument, taking into account rules of procedures and the provisions of the treaty. Countries may also wish to have reasonable assurance that others are themselves applying the charge properly, not least because they may need to give credit against charges they themselves would apply for charges levied by others.

90. **Further issues arise with the ceding of revenues** . These relate not only in the use made of the proceeds but in relation, for instance, to the amounts ceded and whether there will safeguard clauses enabling countries in dire revenue need to maintain a larger amount. Here the closest parallel is perhaps with arrangements for the collection of customs duties and some other charges in the EU: this is delegated to Member States but the proceeds (net of an allowance for collection costs) are a source of finance for the union itself. That this appears to work well doubtless reflecting a sense that these revenues properly belong to all Member States, not just those at which entry happens to occur. A similar sense may come to be held in relation to taxes in international transport, reflecting as they do the exploitation of the common property—belonging to no nation in particular but to all in general—of the international seas and skies.

91. **Resolving these issues will be both critical and difficult** . They cut across existing international governance structures for climate policies and sectoral issues, and touch deeply the concerns of ministries of finance. These issues being more profound than can be addressed here, the rest of the section focuses on more technical aspects of administering fuel taxes and an ETS for the two sectors.

92. **For ships, continuous monitoring could be mandated using utilizing IMO‘s Long Range Identification and Tracking system to transmit the ship data** . All merchant ships above 300 GT are mandated under IMO‘s SOLAS Convention to provide their position and other information at regular intervals through IMO‘s Long Range Identification and Tracking system. And all ships above 400 GT are under IMO‘s MARPOL Convention required to keep record of their fuel in the Oil Record Book and to obtain a Bunker Delivery Note for each bunkering which has to be kept onboard for 12 months after the fuel is consumed. This data could be held against the ship‘s electronic account in the central register and would give reliable information as to whether a ship is in compliance or not, and could trigger enquiry followed by appropriate action in the next port of call.

46