Keyword

Case studies: USA, Russian Federation, China, Flag registration, International Shipping Industry, Northern Sea Route, Protectionism

Abstract

Shipping is the lifeblood of world trade and the global economy, but in order to maintain its growth and manage its impact on the social-economic climate, agreement of global rules, specifically the flagging of its vessels, is critical. The international shipping industry is responsible for the carriage of around 90% of world trade and there are over 50,000 merchant ships trading internationally, under flags registered in over 150 nations. Although 98 per cent of world trade has taken place under World Trade Organisation (WTO) rules (UNCTAD, 2018), the use of Flags of Convenience (FOC) and protectionism is on the rise and is viewed as a viable policy option by some countries. This paper examines growing concerns regarding the increased protectionist approach taken by the United States of America (USA), Russia and China regarding the carriage of their energy exports. Two potential game-changing trends are the Energizing American Maritime Act (2017) which proposes that 15 percent of American exports of crude oil and liquefied natural gas (LNG) should to be transported on USA flagged vessels by 2020 and 30 percent by 2025, and, Russia’s plans to restrict loadings of hydrocarbon cargoes at Northern Sea Route ports, to Russian-flagged vessels. Further, in January 2018, China issued a White Paper on its strategic approach to the Northern Sea Route (NSR) signaling its move from partnership to a position of dominance taking advantage of this shortcut to Europe and the for extracting natural resources from the Arctic seabed as a result of global climate change. Although the details of these inward-looking policies and restrictions are not yet clear, these intended actions are concerning, and could create a precedent for other nations to follow. 


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