1. Policy Issues in the Internal EU Market for Maritime Transport
CEO Series
Policy Issues in the Internal EU Market for Maritime Transport
Alkis John Corres, City Law School, London,
Anthony Rogers, City Law School, London
June 25th 2015, Chios Island, Greece

2. International law clearly distinguishes between...
International shipping, i.e. Shipping activities taking place between individual sovereign states, and
Domestic shipping, i.e. Shipping activities taking place within the territorial waters of a sovereign state.
This was the situation until the EU Commission sought to regulate intra - Community shipping movements through Regulation 3577/92.

3. This Regulation, also known as the Cabotage Regulation, has de facto added a new, hybrid type of shipping activity.
The name of it is ‘’Shortsea Shipping’’.
The appearence of this term has coincided with the introduction of the Regulation which sought to create a semi-domestic regime for intra-Community transport...
.. instead of creating a Single Market as it was under obligation under the EU treaties.

4. We all know SSS consists of domestic and international activity as a result of the half baked European Integration.
Now consider this: International law recognizes to states the right of flag reservation, i.e. the exclusive right of moving cargo within their own territorial waters by ships flying the country’s flag. The persistence of individual territorial waters of the state members – a direct corollary of the lack of integration – has meant that no single EU domestic market could exist. By the same token, trade among EU members continues to be international as per international law’s definition allowing full access to third country flags, alongside vessels with EU flags.

5. The EU has introduced arrangements whereby vessels flying one state-member’s flag could trade within the territorial waters of another under certain limitations.
It has therefore intervened on the status quo of the domestic transportation only through masquerading other EU member vessels as though flying the flag of the member state within which they trade.
The masquerade has been incomplete however as the limitations introduced via crew composition made tonnage inter-penetration in practice impossible.
EU institutions hate bad legislation as nobody wants to reopen discussion.
The Cabotage Regulation has been a failure of such magnitude that it has remained untouched for 23 years.

6. Not only the recipe has not worked in practice, but it is loaded with legal and administrative problems.
The core of the problem was – and still is- the lack of a single legal framework across the EU. This was clearly identified by the DG Mare Commissioner Borg in 2006.
This wise man, a lawyer by profession, suggested the creation of a Common Transport Space i.e. a single coastline with common EU territorial waters.
Such a move would immediately restore order by creating a Single Market but..
..it was promptly shot down in the Council of Ministers.

7. One cannot but wonder about the wisdom of the members of the Council of Transport Ministers at the time..
..as they have voted against the treaties calling for a Single Market giving rise to an anomaly,
They have made a big gift to third flag operators trading between EU member states estimated to be around 25% of the volume,
They have taken away business from the shortsea fleet which is badly needed to replace old tonnage, and..
They have opened the door to third flag operators of questionable quality relying on the Port State Control authorities to keep out the worst of them.

8. Against this backdrop the Athens Declaration last June came as a surprise..
..calling among other things for :
reinforcement of policy towards SSS,
adequate financial support through the CEF for better environmental performance and innovation and
financial support for adapting vessels for the use of alternative fuels.

9. So we now have two very important factors introduced: A renewed political mandate to support SSS and money.
The message was too clear for the shipping associations to miss it. SSS represents 37% of the cargo moved in EU ports and talks inside the various DGs pointed towards interventions to support it by using EU funds. There has even been talk of reviewing some of the high impact considerations of DG COMP. The associations had to run not to miss the party.

10. Now the policy game is set in the following way:
ECSA
ESN
NATIONAL ASSOCIATIONS
SHIP TYPE ASSOCIATIONS

11. Some clarifications for the uninitiated:
ECSA is mainly deepsea and has the form of a federation i.e.its members are national associations rather than companies.
ESN accepts as members national shortsea promotion centres (SPCs), one from every country.
National associations can either comprise deep as well as shortsea interests (Italy, Netherlands) or separate entities (Greece).
Ship type associations (e.g. Intertanko, Intercargo, Interferry etc) have companies as members albeit international reach.

12. At the moment the fight is about which association will be the preferred counterpart to the Commission in policy talks.
Whereas the natural partner to the Commission on Shortsea talks should be the ESN,
ECSA, with the support of national deepsea associations, has declared itself as the party to design the shortsea policy and liaise with DG MOVE,
..despite earlier blessings of the Commission to the draft Strategic Plan of the ESN which could easily contain a shortsea policy.
The Commission has clearly shown its preference to the better organized and more afluent ECSA.

13. The big question is whether this choice of partner will help the implementation of the political mandate of the Athens Declaration.
Our view is not so, in view of clear conflicts of interest between deepsea ad shortsea. As decisions are taken reflecting the choice of the majority it is normal to expect the deepsea majority to have the upper hand in policy options. Putting a deepsea association in the driver’s seat in drafting shortsea policy is plainly wrong and potentially damaging to shortsea.

14. Here is why.
Shortsea needs a Common Transport Space, deepsea does not.
Shortsea vessels have a high average age needing replacement, deepsea vessels do not.
Shortsea which calls in ports much more frequently needs less time spent in port formalities , deepsea would not fight about that.
Shortsea operators suffer the full effects of the SECAs and the Sulphur Directive, deepsea operators are affected much less.

15. Ladies and Gentlemen, enough damage was done to this poor shortsea sector which is asked to do the intra-Community distribution.
Maybe it is time to start recognizing mistakes of the past and see what we can do about them. The EU has been commercially on the losing side for long enough to feel lax about misdirected policy decisions. If we want it to persist and not vanish we need to make sure we stay away from conflicts of interest while drafting policies.

16. Thank you for your patience and may God bless us all.