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RECOMMENDATIONMARITIME TRANSPORT
Recommendation of the Council concerning Common Principles of Shipping Policy for Member countries
13 February 1987 - C(87)11/FINAL
Amended on
28 September 2000 - C(2000)124/FINAL

THE COUNCIL,

HAVING REGARD to Article 5 b) of the Convention on the Organisation for Economic Co-operation and Development of 14 December 1960;

HAVING REGARD to the Declaration on Trade Policy as adopted by Governments of OECD Member countries on 4 June 1980;

HAVING REGARD to the Code of Liberalisation of Current Invisible Operations of 12 December 1961 and in particular to Note 1 to Annex A of that Code;

HAVING REGARD to the Revised Recommendation of the Council of 27 July 1995 concerning Co-operation between Member countries on Anti-competitive Practices Affecting International Trade [C(95)130/FINAL] and the Decision of the Council on the Guidelines for Multinational Enterprises, adopted on 26-27 June 2000, [C(2000)96/FINAL];

RECOGNISING the special character of shipping as an international activity;

NOTING that differences exist in the application of competition legislation to liner shipping by Member countries;

RECALLING the fact that the major shipping policy problems in the liner trades with which Governments of Member countries or their commercial interests are confronted in their relations with other countries relate to the growth of direct or indirect governmental intervention in shipping affairs by other countries;

NOTING that the United Nations Conference of Plenipotentiaries on a Code of Conduct for Liner Conferences adopted on 6 April 1974 a Convention on a Code of Conduct for Liner Conferences and a Resolution concerning non-conference shipping lines, and that the Convention came into force on 6 October 1983;

CONSIDERING that it is desirable that the policies of Member countries on shipping matters in their relations with non-member countries, as well as their relations among themselves, should be harmonised as far as possible;

RECALLING, that the Council of the OECD at Ministerial level on 17 and 18 April 1986 in their Press Communiqué addressed trade policy and trade in services [C(86)56];

RECALLING also that Ministers underlined the importance of extending and making more effective the Code of Liberalisation of Current Invisible Operations and other existing instruments which are applicable to trade-in-services among OECD Members, in order to promote liberalisation in as many sectors as possible;

RECALLING further that the Ministers considered that increased attention should be paid to trade-distorting effects of government subsidies to specific sectors;

EMPHASISING the particular importance in the field of maritime transport of the Code of Liberalisation of Current Invisible Operations, under which all Member countries have accepted obligations that they must continue to observe;

CONSIDERING that the principle of free circulation of shipping in international trade in free and fair competition, which is elaborated in Note 1 to Annex A of the OECD Code of Liberalisation of Current Invisible Operations (1), forms a guarantee of adequate and economic world shipping services and of maximum economic benefit for shipowners, shippers and consumers;

RECOGNISING the need to maintain an equitable balance of interest between shippers and ship operators, bearing in mind the repercussions upon the consumer;

NOTING that the Maritime Transport Committee of the OECD has carried out a review of the shipping policy problems of OECD Member countries and has reached a number of general conclusions and statements of policy concerning common principles of shipping policy for Member countries and that the Committee on Capital Movements and Invisible Transactions has examined these conclusions and statements in relation to the Code of Liberalisation of Current Invisible Operations.

On the proposal of the Maritime Transport Committee[1] and the Committee on Capital Movements and Invisible Transactions:

I.   CONFIRMS that nothing in this Recommendation shall be interpreted as diminishing in any way the obligations accepted by Member countries under the Code of Liberalisation of Current Invisible Operations (hereinafter referred to as "the Code").

II.   AGREES that, in pursuance of, and/or in addition to, the obligations under the Code, no Government of a Member country should introduce new and/or additional measures restricting competitive access to international trade and cargoes.

III.   RECOMMENDS that the Governments of Member countries should endeavour, in pursuance of, and/or in addition to, their obligations under the Code, when contemplating the introduction of new laws and regulations relating to shipping policy, or the amendment of existing ones, to ensure that they are in conformity with the following general principles, and with the guidelines contained in Annexes I and II to this Recommendation.

Principle 1 - The Bases of Member Countries' Shipping Policies

The shipping policies of Member countries should be directed to safeguarding and promoting open trades, and a situation of free competition on a fair and commercial basis in international shipping in their mutual relations, as well as in their relations with non-member countries. These policies should also prevent the abuse of a dominant position by any commercial party. These general elements form the bases for the following Principles and for Annexes I and II to this Recommendation.

Principle 2 - Principles to Follow for Normal Resolution of Problems

In resolving problems arising in trades with non-member countries, the aim of Member countries should be to prevent the introduction by non-member countries of measures that would run contrary to the general aims of OECD, inter alia, the expansion of world trade on a multilateral non-discriminatory basis. Member countries should thus actively oppose the imposition of regimes which restrict the access to cargo moving internationally by shipping companies adhering to the principle of free competition on a commercial basis, in conformity with Note 1 of Annex A to the Code.

In the case of state-trading countries and their carriers, it is necessary to take account of non-commercial and non-reciprocal practices with the aim of arriving at a situation of reciprocity and equality of opportunity.

Principle 3 - Consultations Among Member Countries

When the trade between a Member and a non-member country is subject to pressures for cargo sharing or cargo reservation in favour of the national flag by the policies of the non-member country, including an expansion of the definition of "Government Cargoes" the government of the Member country should be prepared to enter into consultations with the governments of other Member countries concerned, with a view to defending the aims of this Recommendation, and exploring the possibility of a co-ordinated response. Such consultations may be initiated by the Member country whose national trade is concerned or the other interested Member countries. While fully endorsing the principle of consultations with other Member governments at the earliest practicable stage, as stated in this Principle and Principle 6, a Member government may, on occasion, be obliged to act in advance of consultations with other Member countries, pursuant to its maritime legislation or policy requirements, actions of its regulatory bodies, or the need for a speedy response to restrictive measures of non-member countries. A Member country contemplating action in respect of a trade between another Member country and a non-member country will whenever possible undertake prior consultations with that Member country (2).

Principle 4 - Response to Pressures from Non-member Countries

All reasonable endeavours should first be made to solve any problems with non-member countries via consultations and/or negotiations. If circumstances should arise when such government-to-government consultations or negotiations cannot resolve conflicting interests or when the non-member country refuses to enter into these procedures, the governments of Member countries should be in a position to react and, to this end, should provide themselves with such countervailing powers as they consider necessary. In the final analysis, countermeasures may be necessary, and, in their application, the aim should be to secure arrangements in accordance with the principles expressed in this Recommendation.

Principle 5 - Availability of Countervailing Powers

Where the free competitive sea transport market is undermined by actions of third countries or where such a country disregards its relevant international obligations, Member countries should have at their disposal powers to react to such a situation.

Principle 6 - Use of Countervailing Powers

When the introduction of countermeasures is contemplated, there should be, subject to what is contained in Principle 3, consultations among the OECD Member governments concerned with a view to the co-ordinated use of these powers. If countermeasures are decided upon following these consultations, the Member country whose national trade is involved can reasonably look to the Member countries with companies in the trade as crosstraders for support in the form of the joint introduction of countermeasures by all the Member countries concerned. In those exceptional cases in which prior consultation has not been possible, each Member country undertakes to inform other Member countries as soon and as fully as possible, of countermeasures adopted. Member countries acknowledge that the imposition of countermeasures or the participation in harmonised response as stated in Principle 3 above, is subject to the foreign policy considerations of individual Member countries in each case. A Member country may decline a request to participate in concerted countermeasures if, in its view, the Member country requesting countermeasure actions itself operates practices similar in effect to those against which the countermeasures are proposed to be directed (2).

Principle 7 - Equitable Treatment in Shipping Agreements

OECD Member countries should ensure wherever appropriate the equitable treatment of their shipping through the inclusion, in trade, navigation and other agreements with non-member countries, of clauses aimed at ensuring competitive access of the carriers of all Member countries to both ports and cargo in the trades concerned.

Principle 8 - Freedom of Shipping in the Bulk Trades

OECD Member countries reaffirm their commitment to a free and fair competitive environment in the dry and liquid bulk trades. They are convinced that cargo sharing in the bulk trades leads to substantial increases in transportation costs and has a serious effect on the trading interests of all countries.

Principle 9 - Governmental Supervision of the Trade

OECD Member governments acknowledge that in order to give full effect to international obligations which they assume in connection with other countries, their supervisory powers should, as far as possible, be harmonised on an OECD wide basis.

Principle 10 - The Role of Government and Competition Policy in Liner Shipping

The role of government is to safeguard and promote a situation of open and fair competition and to prevent the abuse of a dominant position by any commercial party. Its involvement should be on a basis of such minimum intervention as may be adequate in the particular situation and consistent with the maintenance of a free and fair competitive and commercial environment (3).

In determining how national competition policy should be applied in international shipping, it is essential for governments to give adequate consideration to the way their measures will affect the activities of foreign companies or might interfere with the competition policies and the interests of other OECD Member countries' governments.

Principle 11 - The Relationship of Governments to the Activities of Shipping Lines and Conferences

In determining what activities of shipping lines and conferences are desirable or undesirable, in accordance with the guidelines set out in Annex II to this Recommendation, governmental involvement should be directed towards the maintenance of a balance between the interests of shippers and shipowners, bearing in mind the repercussions on the end-users of the cargoes. If it appears that these interests and repercussions are not being sufficiently taken into account it is the responsibility of governments to redress the balance as appropriate. However, in doing so the normal commercial activities of shippers, shipowners and conferences should not be unduly impeded or distorted.

Principle 12 - Avoidance and Resolution of Conflict in Matters of Competition Policy Concerning Shipping

If agreement could be reached concerning what activities should be controlled from the point of view of competition and on how this should be done, there would be no source of conflict between regulatory authorities. However, this may prove to be impossible and, because of its inherent character, international shipping will be particularly affected by conflicts of law and policy.

When such conflicts emerge, or appear imminent to any party, either because of the enactment of new competition legislation affecting shipping, by modifications to existing legislation, or as a result of the application by a government or one of its agencies of existing laws or policy in a particular case, governments of Member countries should endeavour as appropriate and practicable to minimise these and arrive at mutually acceptable solutions through bilateral or multilateral consultations. Such consultations should be in accordance with mutually acceptable arrangements adopted on a bilateral or multilateral basis between Member countries.

Governments of Member countries should make full use of existing OECD fora including the Maritime Transport Committee. These arrangements and the spirit in which they are implemented should be in accordance with the general considerations and practical approach established under the Revised Council Recommendation of 21 May 1986 and the second Revised Council Decision of 17 May 1984, to ensure full mutual comprehension by Member countries of the philosophies and practical effects of the application of competition policy to shipping in Member countries.

Principle 13 - Non-Conference Shipping

The protection of free circulation of international shipping in a competitive commercial environment requires that opportunities for fair competition on a commercial basis by non-conference shipping lines continue to exist and that shippers are not denied an option in the choice between conference and non conference shipping lines, subject to loyalty arrangements where they exist. Restrictions should not be imposed by governments on the right of individual shipping lines to decide whether they want to operate inside or outside the conference system. Governments of Member countries should take appropriate steps when another country adopts measures or practices that prevent fair competition on a commercial basis in their liner trades and should, under such circumstances, consult with each other, upon request, with the objective of remedying the situation.

Principle 14 - Maritime Auxiliary Services[2]

OECD Member countries consider that there should be non-discriminatory treatment as regards the access to and use of maritime auxiliary services, and that the application of fees and charges should be transparent.

Additionally, where these auxiliary services are commercially provided, there should be a free and fair competitive environment as regards their provision, subject to providers meeting required safety and other standards of the country where the services are provided.

This Principle applies to those services which a vessel might use within a port, including while berthed, and includes (but is not limited to): pilotage, towing and tug assistance; provisioning; discharge of waste and ballast water; navigational aids; shore-based operations essential to ship operations, including communications, water and electrical supplies; emergency repair services; anchorage and berthing services; container handling, storage and depot services; maritime agency services; maritime freight forwarding services; maritime cargo handling services; custom clearance services and maintenance and repair of vessels.

Principle 15 - International Multimodal Transport

OECD Member countries consider that international multimodal transport involving a sea-leg is an integral part of the transport chain, and that there should be non-discriminatory treatment as regards the access to and use of those services, as well as a free and fair competitive environment in regard to their provision.

Principle 16 - Measures Relating to Safety, the Environment and Substandard Shipping

OECD Member countries acknowledge the leading role of the International Maritime Organization in respect of questions related to safety, the environment and in combating substandard shipping.

OECD Member countries recognise their responsibilities in respect to safety, the environment and substandard shipping. Therefore, the shipping policies of OECD Member countries should be directed to:

• Involving all players in the shipping market in creating a fair and transparent market;

• Ensuring that all vessels entering their register of ships, and flying their flag, meet applicable international rules and standards concerning, in particular, the safety of ships and persons on board and the prevention of pollution of the marine environment; and

• Properly exercise port state control.


ANNEX I    

GUIDELINES CONCERNING THE TRANSPORT ACTIVITIES OF MOBILE OFFSHORE VESSELS (4)

Offshore Vessels

1.   Governments of Member countries of the OECD should secure free trade in transport services rendered by mobile offshore vessels and refrain from measures giving preferential treatment to national flag vessels with the aim of promoting free and fair competition on a commercial basis.

2.   In order to facilitate the free circulation of transport services rendered by mobile offshore vessels, Governments of Member countries will encourage the harmonisation of social and technical regulations concerning the maritime activities of mobile offshore vessels by appropriate international organisations, including IMO and ILO.

3.   This statement applies to the transport activities of mobile offshore vessels beyond the territorial waters of a Member country.

4.   Mobile offshore vessels are defined as vessels that are engaged in activities associated with the exploration or exploitation of the non-living natural resources on or below the seabed.

Note: The MTC, in formulating these guidelines, noted that the non-transport activities by mobile off-shore vessels are closely associated with the transportation activities. The MTC therefore invites the CMIT and other appropriate OECD bodies to consider the scope for liberalisation of those services rendered by mobile off-shore vessels which are not transport services.


ANNEX II    

GUIDELINES CONCERNING COMPETITION POLICY AS APPLIED TO LINER SHIPPING

Section A   General

i)   Agreement upon Common Rules on what Activities should be Controlled

1.   Agreement should be reached on those activities of shipping lines and conferences which are undesirable and should be discouraged or prevented, and those which are desirable and should be encouraged or required. Some of these activities are set out in Section B but this Section should not be regarded as necessarily exclusive.

2.   Conferences as such are generally accepted as a satisfactory means of organising liner shipping trade. However, because they are usually exempted from the full impact of cartel legislation, to avoid abuses of a dominant or monopolistic position it is necessary that they should be exposed to counterbalancing forces notably by competition or the possibility of competition from lines outside the conference, and strong shippers or shippers' councils. The activities of conferences should also be exposed to administrative regulation where this appears necessary. By the existence of these checks, conferences or the shipping lines within them should not be in a position to abuse a dominant or monopolistic position, which they may have achieved by reason of their exemption from cartel legislation.

3.   Governments should take the necessary steps to prohibit any abuse of a dominant position by a conference. If a conference by abusing its dominant position causes the elimination or exclusion of competition from non-conference lines or if a member line, including a cross-trader line, is driven out of a specific conference trade in defiance of the conference agreement, governments should be able to take measures to ensure that such lines have the opportunity to compete in that trade. Governments should also take the necessary steps to prohibit any abuse of a dominant position by independent lines.

4.   Governments should take the necessary steps to ensure that no line engages in unfair or non-commercial practices. In acting against unfair or non-commercial practices, without inhibiting the right of independent lines to compete freely and fairly with conferences, governments should endeavour to reach consensus on those practices that should be regarded as unfair or non-commercial.

ii)   Agreement upon Common Principles of Enforcement

5.   In cases where direct governmental intervention is deemed necessary, any regulatory body established for this purpose should be provided with clearly defined powers and authority, including the activities to be controlled as agreed under (i).  Prohibited practices should be clearly defined.  Where there is more than one such regulatory body within a national framework, their respective jurisdictions also need to be clearly defined.

6.   Non-national lines and shippers should be treated in the same manner and according to the same criteria as national lines and shippers, provided that the other country operates in the same manner.

7.   It is for individual governments to select how enforcement should be undertaken such as whether a first approach could be to assure themselves of the existence and effective operation of self-policing systems within the conferences.  With respect to relations between conferences and shippers, procedures should be provided whereby complaints of activities which are prohibited by national competition legislation can be received and legally remedied.  Similarly, procedures should be provided to promote or maintain fair competition on a commercial basis between conferences and non-conference lines.

8.   Alternatively, or in addition, some governments may choose to establish systems of prior approval by regulatory bodies and enact legislation prohibiting or requiring certain actions under the sanctions of penalties as necessary.

9.   In any case, mechanisms should exist whereby consultations can be initiated both with national and non-national private organisations in advance of substantial new developments in the field of competition policy as applied to shipping or of important new applications of existing regulations in specific cases (5).

Section B   Specific Practices of Conferences and Conference Members which can be generally Considered Desirable or Undesirable

i)   Specific Practices with Relation to Shippers

10.   Among the desirable practices of conferences, which may be required of them by governmental regulation or by common agreement, are the following:

a)   The provision of tariffs and related rules and conditions of carriage and their ready availability to any interested party at reasonable cost.

b)   The organisation of prior meaningful consultations and/or negotiations with shippers, shippers' organisations or other bodies directly involved concerning inter alia changes proposed in tariffs, conditions of carriage or provision of services and the introduction of new technology, except where national law provides other means of protecting shippers' interests.

On the other hand certain practices appear undesirable including:

c)   The offering of special terms or rebates to particular shippers which are not available to other shippers similarly situated or which are not in accordance with service contracts.

d)   Any refusal to carry goods of a shipper because he has used non-conference carriers or specific inland transport services or the imposition of excessive penalties for so doing.

e)   The introduction of loyalty contracts which tie the shipper to the conference by such means as making excessive differences between contract and non-contract rates, or by not providing arrangements for short-term termination.

f)   The introduction of surcharges which more than recoup the extra expenditure caused by the particular situation for which the surcharge was imposed. Prior or, if necessary, subsequent consultations should always accompany the introduction of, and, where relevant, amendments to, surcharges, unless national law provides other means of protecting shippers' interests.

ii)   Specific Practices with Relation to Lines Outside the Conference

11.   Possible practices in which conferences might indulge with regard to non-conference lines, which could be regarded as abuse of their dominant position, include:

a)   The use of fighting ships or similar means to forestall a non-conference line in obtaining cargo.

b)   The deliberate conclusion of agreements with governmental or quasi-governmental authorities which have the effect of restricting competition by the exclusion of non-member lines from participation in the trade or of placing them at a substantial disadvantage with regard to conferences lines (6).

c)   The establishment of unreasonable, discretionary criteria for lines seeking to join the conference. Cross trading and national lines of OECD countries should continue to have the opportunity to serve the trades of any OECD country as members of conferences or as outsiders competing with the conferences.

iii)   Specific Practices with Relation to Lines Inside the Conference

12.   The relations between lines within a conference and between the conference and its members are governed by the terms of the conference agreement in conformity with applicable national laws.  The efficient operation of a conference implies the existence of conference machinery to police the terms of the conference agreement, to ensure, for example, that member shipping lines do not offer individual shippers terms that are not in accordance with the tariffs of the conference as published or otherwise made available to shippers (7).

13.   Conference agreements are agreed between the members at the time of establishment and subsequent participants may find it difficult to amend the agreement.  It is therefore important that the initial agreement, which may or may not require governmental approval, should be equitable between present and future members over such matters as the duration of notice that a line wishing to leave the conference must give, the penalties that might be incurred as a result of doing so and the procedure for handling reports of malpractices by member lines.


OBSERVATIONS TO THE RECOMMENDATION OF THE COUNCIL    

NOTES (1) TO (7) - C(87)11(FINAL) - 13 FEBRUARY 1987

Preamble

(1)    Preambular paragraphs 3 and 14: The United States wishes to draw attention to the fact that the second sentence of Note 1 to Annex A of the Code of Liberalisation of Current Invisible Operations, "does not apply to the United States".

Principles 1-13

(2)    Principles 3 and 6: It is agreed that the term "national trade" refers to cargoes moving to and from the Member country concerned.

(3)    Principle 10: Australia accepts this text as being compatible with ensuring the equitable participation of its national flag shipping on a fair commercial basis.

Annex I

(4)    These guidelines are initially introduced for a number of Member countries in the hope that the others will be progressively able to adhere to them. The following countries cannot, at the present stage, associate themselves with these Guidelines: Australia, Canada, Italy, Japan, New Zealand, Portugal, Spain, Turkey, United States and United Kingdom.

Annex II

(5)    Paragraph 9: The United States accepts this paragraph on the understanding that United States law and legislative procedures provide adequate opportunity for interested parties to comment on new developments.

(6)    Paragraph 11 b): This clause does not concern commercial agreements between quasi-governmental authorities and conferences or individual lines which were awarded on a commercial basis but during their duration limit the transport of a particular commodity in the trade to the conference or line having received the contract.

(7)    Paragraph 12: The United States accepts this paragraph on the understanding that it allows individual lines to exercise the right of independent action on any rate or service item required to be filed in a tariff under Section 8 a) of the Shipping Act of 1984 and as allowing conferences or carriers to offer service contracts to individual shippers or shippers' associations as provided for in Section 8 c) of the Shipping Act of 1984. Canada would broadly interpret the last clause of this paragraph to mean that independent action and service contracts are available.

Relevant body:
Committee on Capital Movements and Invisible Transactions now called Investment Committee

[1] The Maritime Transport Committee no longer exists as its mandate expired on 31 December 2008.
[2] Turkey is unable to accept those elements of Principles 14 and 15 which relate to the "provision" of those services. Greece cannot commit itself to accepting the new Principles 14 and 15 at this stage.
 
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