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Australian Chamber of Commerce and Industry

Principles of Maritime Transport Policy

Australia, as an island nation, is critically dependent upon an efficient and competitive maritime transport sector for its trade in agricultural, resource and many manufactured products.

While air transport accounts for a growing share of our higher value-added manufactured exports and is the backbone of our trade in services, maritime transport will, for the foreseeable future, underpin our tangible trade with the world.

In 2001 the nation’s 29 major bulk and general trading ports handled around 20,000 vessel calls each year, with 21 of these ports managing some 90 per cent of our international cargo task.

Australia’s economic future depends on our capacity, as a nation, to both champion and deliver a competitive, open, and non-discriminatory maritime transport sector, both domestically and internationally.

POLICY OBJECTIVES

The ACCI’s overarching policy objectives include:

  • encouraging sustained competitive advantage for Australia in meeting the challenges posed by the increasing globalisation of international trade and its support services
  • the growth and operation of a maritime transport sector driven by the effective operation of market forces
  • liberal and contestable maritime transport services and systems, based on the core principles of national treatment, most favoured nation and non-discrimination
  • setting the appropriate role for government in maritime transport as promoting liberal and contestable markets for maritime transport-related services through effective competition laws with minimal, objective and transparent regulatory interventions
  • effective coverage of the international maritime transport sector by the rules-based, multilateral trading system, operating under the auspices of the World Trade Organisation.

Specific, immediate policy objectives include:

  • promoting the effective application of competition laws to the maritime transport sector, with any exceptions or special treatment being fully transparent, and subject to objective and periodic review
  • ensuring any restrictions on access to maritime transport systems and/or services are limited to genuine sea safety issues, with such restraints being transparent and subject to objective and periodic review
  • calling upon the maritime transport industry, and the appropriate government authorities, to take effective action against sub-standard shipping wherever it is found
  • encouraging positive and constructive commercial relations between shipping suppliers and users along all elements of the maritime transport chain, within the bounds of acceptable commercial practice and competition laws.

THE POLICY FRAMEWORK

The maritime transport sector exists to provide services to other sectors, most notably agricultural, resources and manufacturing.

As such, an efficient and competitive maritime transport sector is essential to the fundamental and sustained competitiveness of these sectors, and the industries and firms within them, whether they are traded or non-traded sectors.

Maritime transport remains the backbone of global trade and transport, far and away eclipsing the main alternate mode, air transport, by volume.

Better forecasts see the international maritime transport sector growing by around 5 per cent per annum, on current global economic conditions, with ocean-going vessels (whether tanker, bulk or liner) becoming ever larger and capable of carrying greater loads (for example, container vessel capacity has increased to around 7,000 containers).

Taken as a whole, the international maritime transport sector is regarded as fairly liberal and competitive, especially when compared with other services sectors and transport sub-sectors.

The international bulk transport sub-sector, which services the agricultural and resource sectors, operates largely without unnecessary regulatory restriction, with prices and contracts set in highly-competitive, price-sensitive markets.

The international liner shipping sub-sector, which services the manufacturing sector, operates within a dichotomous framework: liner shipping conferences, which are industry self-regulated arrangements, determine price levels and service frequencies; and others, typified both in large fleets and small independent operators, operating in a competitive marketplace. Both arrangements have emerged and operated to meet the requirements of shipping users in relevant circumstances.

The past quarter-century has seen traditional liner shipping conferences play a diminishing role within the international maritime transport sector with the erosion of State trading and the emergence of new players, pointing to a much greater role for competitive influences.

Competition Law, Policy and Regulatory Frameworks

The Australian maritime transport sector, both domestic and international, operates under a framework of regulations, imposed by the Federal, State and even local governments.

Insofar as governments and their agencies impose regulations upon the maritime transport sector, these should be minimal, light-handed and transparent, and sensitive to the commercial circumstances of shipping providers and users.

Commerce and industry accepts the prerogative of ship owners to form and operate shipping conferences. However, such arrangements, given their potentially anti-competitive effects, should be subject to effective oversight by competition laws and policies. There must also be a parallel prerogative of disassociation or non-membership.

Regulation policy and practice should not discriminate between shipping providers based on their participation or otherwise in a conference-style arrangement.

The Australian Government should use bilateral, regional and multilateral mechanisms to encourage the application of similar practices in other shipping and trading nations.

While commerce and industry supports constructive relations between service providers and users along the maritime transport chain, these should not be allowed to operate in ways that are incompatible with competition law and policy, in particular adversely affecting competition and contestability in the marketplace.

Where they exist, government-owned vessels and shipping fleets should operate under the principle of competitive neutrality - namely, they should enjoy no net advantage by reason of their public ownership.

Further Liberalisation Initiatives

While the international maritime industry generally operates within a highly liberalised framework, further market-opening reforms would be worthwhile and can be usefully progressed through bilateral, regional or multilateral fora and mechanisms.

ACCI opposes policies and practices of a cargo-restrictive/allocative nature and/or which limit market access, such as numerical quotas for shipping providers or given routes, exclusive service agreements, ‘economic needs’ tests, and cargo-reservation arrangements.

When and where such arrangements exist, they should be made transparent, and then progressively wound back, with a view to their complete elimination.

The rules-based, multilateral trading system, administered by the World Trade Organisation (WTO), must give greater attention to international maritime transport matters.

Broad and bold liberalisation promoting liberal market access should be pursued vigorously within the General Agreement on the Trade in Services (GATS), building upon the core principles of national treatment and most favoured nation.

Maritime Safety Issues

Safety must remain a critical issue for the maritime transport industry. Minimising the loss and damage to vessels, cargo, and their crew and other employees must be a priority for all those engaged in the maritime transport chain.

ACCI recognises that not all parties in the international maritime transport sector share equivalent commitment, nor apply the necessary diligence, to ensuring full and effective compliance with international rules and standards for maritime safety.

While national maritime authorities must be vigilant to sub-standard shipping, ‘flag states’ have a substantial obligation to ensure shipping operating under their flags comply fully and effectively with international rules and standards. ‘Open Registry’ systems (also known as ‘flags-of-convenience’) should not be used to circumvent globally recognised standards of maritime safety.

The International Maritime Organisation can play a constructive role in promoting ‘best practice’ arrangements in sea safety standards and, in conjunction with national governments, facilitating compliance thereto. The Australian Maritime Safety Authority can play a similar role within the domestic jurisdiction, in particular through rigorous port-State inspection processes.

Port and Auxiliary Services

Port and auxiliary services are an integral part of the maritime transport system, and perform a vital interface between land (namely road and rail) and sea transport. Key services in this regard include cargo handling, storage and warehousing, maintenance and repair of vessels, as well as customs clearance, quarantine inspection and documentation processing.

Traditionally, most harbour-side services have been delivered by government-owned and operated providers, which have functioned within a mindset of bureaucracy and a greater orientation to artificial employment creation and revenue-raising than efficient service delivery. More recently, substantive progress has been made to move toward world’s best practice. Efficient and competitive harbour-side services are essential in the maritime transport sector, and their performance, individually and collectively, must be benchmarked to, and meet, world’s best practice standards. Barriers to such performance must be tackled vigorously, with pro-reform initiatives being oriented toward achieving world’s best practices.

Where port and harbour-side services are provided by the public sector, these should be delivered, in the first instance, by discrete, corporatised entities operating to commercial performance criteria, with the view to their full and effective privatisation. In smaller ports, a system of transparent, open competitive tendering for the contractual delivery of port services may be appropriate.

Regardless of ownership, all port and auxiliary services should be available to all maritime users on a reasonable and commercial basis.

Restrictions for reasons of national security should be transparent, while those for environmental reasons should be transparent and consistently applied, and not used for other policy objectives (such as foreign or trade policy, for example implementation of trade sanctions).

A liberal and contestable supply of labour services within the maritime transport sector is also essential, especially in areas related to harbour-side services.

Enterprise bargaining arrangements and greater competition in the supply of labour should replace anti-competitive and collectivist labour relations modes of operation, which undermine the competitiveness and efficiency of the maritime transport sector. At the same time, relevant service providers within the maritime transport sector have an obligation to ensure high levels of competence and training in key areas (such as ships officers and pilotage).

In order to provide a continuing supply of Australians with seagoing qualifications and experience to meet market requirements and defence needs, Australian residents working at sea should not be disadvantaged under income tax laws compared to Australian residents working ashore in either foreign or domestic service.

Other Policy Linkages

The maritime transport sector does not operate in complete isolation of other sectors of commercial activity. Rather, it has implications for, and is influenced by, other policy domains, most notably environmental, immigration, industrial relations, training and foreign and trade policies.

Dr Brent Davis
Director, Trade and International
Telephone: 02 6273 2311
Facsimile: 02 6273 3286
Email: [email protected]

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