Shipping in the Baltic Region

Michael Roe, Michael Roe

• Editorial: Routledge
• Año: 2017
• ISBN:
  9781351900225
• Edición: 1
• Categoría: Technology & Engineering
• Categoría: Marine Transportation

This text provides an original contribution to the maritime literature focusing on developments in this field in the Baltic Region. This part of the world has seen dramatic changes in recent years, particularly with the collapse of the Communist led regimes in Poland and the Soviet Union, and the emergence of the new states of Latvia, Lithuania, Estonia, Russia and neighbouring Ukraine and Belarus, the reunification of Germany and the disappearance of the old DDR and the entry of Finland and Sweden to the European Union. This book looks at some of these changes and how they are impacting on the shipping sector. Its topicality reflects on growing research and teaching interests in these fields. Edited by the leading expert in East European maritime affairs and containing original material from the team of researchers at the highly prestigious University of Gdansk, it provides a welcome source of discussion and information and forms part of the new series of texts originating from the Institute of Marine Studies at the University of Plymouth, concentrating on maritime policy, law, economics and marketing.

European Union shipping policy and Eastern Europe

Gillian Ledger and Michael Roe
Centre for International Shipping and Transport
University of Plymouth

Abstract

This paper examines the changing relationship between the European Union (EU) and the countries of East Europe, in the field of shipping policy concentrating only upon the period up to around 1992 when policies had to change dramatically to incorporate the transition in European politics and relationships that was occurring. It outlines and discusses the slowly emerging details of EU shipping policy, including Stages One and Two and a number of other suggestions emanating from the Commission. Whilst doing so, it emphasises the impact on East Europe and the influence that East European states have had upon Union policy.

The significance of the Single European Market and new community entrants are also discussed.

Finally, the impact of changes in East Europe is noted upon the future development of East-West policy making.

Introduction

With the changes taking place in East Europe, the attitudes of the European Union - hereafter referred to as the European Community or EC - towards the East have altered considerably. Merritt (1991) commented that the EC nations’ policies towards Eastern Europe might be described as “chaotic and unpredictable”, and that establishing a durable and consistent relationship between the EC and East Europe is essential although it will not be easy. This paper aims to examine the development of a Community shipping policy in the light of these changing attitudes and relationships, and to look at the impacts upon East Europe.

When the Community was founded in the late 1950s, the Soviet Union saw it as a reinforcement of the capitalist camp, detrimental to Soviet interests, and having decided not to accord it juridical recognition continued to treat it for over two more decades with varying degrees of coldness. The Community for its part paid only marginal attention to East Europe throughout the 1960s although as détente began to replace the cold war, EC members sought to outdo each other both economically and politically in their relations with the East. At first the British set the pace with a fifteen year credit for the Soviet Union in 1964. But the most important of this series of agreements was the Moscow Treaty between the Soviet Union and the Federal Republic of Germany, signed in 1970 which led to more normal relations between the two parties (Pinder 1991). Meanwhile the Treaty of Rome signed on 25th March 1957, under which the EEC was formed, had made no special provision for relations with the states of East Europe, apart from the ‘Protocol on German international trade and connected problems’.

Transport and Shipping policy of the EC

According to Arbuthnott and Edwards (1979) the general aims of the Treaty of Rome included:

1. Drawing the people of Europe closer together.
2. Encouraging economic growth.
3. Improving living and working conditions.

The treaty specified three areas as being essential to unification of the Community; these were:-

1. Agriculture.
2. Social Services.
3. Transport.

As far as transport was concerned, the Treaty stated that:

The transport market must be organised in accordance with a market economy. Public intervention should occur only where it is otherwise impossible to proceed. The Community must ensure that restrictions to freedom to provide services are removed. At the same time the aim is to harmonise the overall framework in which modes and companies operate. Therefore we must not lose sight of the objective of optimising the transport process with a view to increasing competitiveness of the EEC, and improving services to the public (Treaty of Rome 1957).

Article 84(1) of the Treaty excluded sea and air transport from the common transport policy, stating that “the provisions of this title (i.e. Title IV, Transport, of Part Two, “Foundations of the Community”) shall apply to transport by rail, road and inland waterway”. Article 84(2), however adds:

The council may, acting unanimously, decide whether, to what extent and by what procedure, appropriate provisions may be laid down for sea and air transport (Seefeld 1977).

Hence, for many years, the EC did not have a shipping policy as the need for one was considered to be excluded by the Treaty. Also the law making process of the EC was bureaucratically slow and shipping was not as prominent an issue with either governments or the electorate as numerous others such as agriculture or industrial development. The result was that between 1957 and 1977 there was no shipping legislation. The first moves were made when the UK and Ireland, both major seafaring nations, joined the EC in 1973, and in particular when the UK took the European Council of Ministers to the European Court of Justice over a narrow maritime issue, relating to the employment mobility of European seafarers, and won. During the 1980s, the EC registered fleet declined drastically compared to world fleets, and the need for a stated policy became more than evident (Commission for the European Communities 1989).

Between 1977 and 1985, in particular, several different shipping policy areas were investigated and developed, although little legislation was agreed. These policy areas can be summarised as follows:

1. Social issues relating in particular to free movement of people - including seafarers’ employment - between countries, harmonisation of seafarers’ working conditions, and a range of social security measures relating to the maritime sector, for example social and health benefits.
2. The right to establish shipping companies throughout the EC; the Treaty made it illegal for countries to show bias against any non-national attempting to set up a shipping company. This related to the issues of harmonisation and liberalisation.
3. Liner shipping conferences were recognised as violating the Treaty of Rome as they were anti-competitive. However, they did present strong political arguments for their retention and hence no progress was made to 1985.
4. Safety and pollution legislation in relation to shipping was agreed before 1985. The EC entered into negotiations with organisations such as BIMCO, and between 1978 and 1982, produced shipping related Directives, including those relating to pilots and tanker operations.
5. The “Brussels package” agreed by all member states in 1979 stated that ratification of the UNCTAD code by EC members was a requirement. The 40/40/20 agreement was to apply to Member States’ trade with developing countries. Couper (1977) pointed out however that the code did not cover the activities of outsiders who do not belong to the conferences and hence would not affect operations of Comecon countries.
6. The Commission also recognised that the EC shipbuilding industry was feeing economic difficulties and accepted that member states might have to provide subsidies. Although the EC has consistently been anti-subsidy in policy, a fixed but reducing percentage of ship cost (11% in 1991) was allowed to be subsidised. There is some evidence to show that these directives have been broken continuously since introduced.
7. In 1977 the European and Social Committee for the European Communities (ESCEC) produced an opinion on the “EEC’s transport problems with East European countries”. The report pointed out that the steadily mounting competition from the Eastern bloc in the field of maritime shipping was a cause for grave concern on account of the conditions under which it was flourishing. It added that because they were able to operate freely in the west, Eastern bloc countries were succeeding to an increasing degree in changing the pattern of East-West goods traffic in their own favour. Accordingly, the ESCEC pointed out that not only may Eastern bloc carriers’ penetration of the markets threaten employment in transport, but in the long run, there may be grave drawbacks for industry in the Community as a whole. For this reason the Committee called on all the institutions responsible for East-West transport questions to tackle this matter with the utmost vigour in order to ward off developments that would be disastrous for the economy and have grave social consequences (ESCEC 1977). The Committee then outlined the objectives they considered important in the specific field of sea transport as follows:
   • * Comecon countries should be made to drop freight rates that are in no balanced relation to the normal terms in Western countries.
   • * Community shipowners should be given a balanced share of bilateral traffic between Community and Comecon ports in both directions, at adequate rates and without carriers from other countries being excluded.
   • * West European shipowners should be given the chance to acquire a share of traffic between Comecon ports and ports outside the Community.
   • * Eastern bloc shipping lines should be allowed to accede to existing agreements between Western shipowners.

The ESCEC along with the Commission and the European Parliament had shown an interest in Eastern bloc activities for a number of reasons as it had created problems for EC shipping since the end of world war II. From 1977 onwards, the Seefeld Reports (Seefeld 1977 and 1979) investigated the area and reported back to the European Parliament and Commission. Eastern bloc shipping at this time was described as having a “conventional purpose of serving its own markets” and as performing “dubious defence exercises”. All vessels were thought to have a defence bias or alternative defence purpose.

The first Seefeld report (23/3/77) called for the Commission to establish a common position toward state trading countries and other countries that wanted to build up their own merchant fleets. It suggested that pressure from outside the Community was forcing Europe to act, and highlighted the fact that state trading countries were “forcing their way onto the world shipping market and endangering the member states ‘shipping industries”. Until this time the Community had ignored these countries which in default of a clear cut Community decision on maritime policy were able to insist that all their export transactions were effected on a CIF basis and all their import transactions on an FOB basis, which left sea transport completely in their hands and eliminated European shipowners from this trade.

Even more important to the shipping industries of the Community countries was the threat represented by the widespread practice adopted by the state trading countries of undercutting conference tariffs in transport operations which linked directly to the member states but more especially in cross trades. Many western shipping companies were convinced that undercutting to an extremely low level in this way corresponded to dumping and pointed out that by western standards the Eastern bloc fleets were operating uneconomically in that, for example, vessel replacement costs were not being covered, although many of these arguments were disputed by a number of commentators including Bergstrand and Doganis (1987).

These points had already been identified in 1976 by Prescott (1976) who also noted the problematic practices of inter-governmental (either bilateral or multilateral) agreements reserving part or all of the cargo moving in the trade, and the establishment of joint shipping agencies in foreign countries without reciprocity; Western shipping businesses were not afforded the same possibility to run their business in Eastern bloc countries with the same freedom (Russell 1975).

The Seefeld report carried on to point out that state trading countries were “double-dealing”, for example in connection with the code of conduct for liner conferences. On the one hand they voted with the developing countries in UNCTAD when it was a question of “thwarting the interests of the traditional maritime nations”, on the other hand they adopted the position of an outsider by undercutting both industrialized and developing countries’ shipping companies.

Seefeld suggested that if the Community did not develop a coherent sea transport policy, the goods to be shipped, would always be regarded as more important than the interests of those shipping them. Although the report did not suggest any policy alternatives, it did support the call from the shipping companies’ associations for effective protection against the non-commercial practices of the state trading countries and hoped that the Community would raise shipping questions in any negotiations between the EEC and Comecon. Couper (1977) went on to suggest t...