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Flag of convenience

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For the use of multiple jurisdictions in business operations other than dealing with ships and similar vessels, see Flag of convenience (business).
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The chemical tanker Sichem Princess Marie-Chantal had Panama City as its port of registry when this 2005 picture was taken but as of 2007 it is registered in Valetta with Maltese flag. It was the property of Eitzen Chemical (Singapore) and has the ITF Special Agreement on board[1].

A ship is said to be flying a flag of convenience if it is registered in a foreign country "for purposes of reducing operating costs or avoiding government regulations". [2]

The term has been used since the 1950s and comes from the flag a ship flies to show their country of registration. The country of registration determines the laws under which the ship is required to operate and to be applied in relevant admiralty cases.

Contents

[edit] Background

Today, more than half of the world’s merchant ships (measured by tonnage) are registered under the so-called flags of convenience, more commonly referred to as "open registries".[citation needed]

Traditional reasons for choosing an open register include protection from income taxes, wage scales and regulations. A specific example of the type of advantage flying a flag of convenience offers is bypassing the 50% duty the United States government charges on repairs performed on American-flagged ships in foreign ports.[citation needed]

Globalization has significantly influenced the mechanics of world trade. Likewise, it has also affected the owning and operating structures of merchant ships. Long gone are the days of the traditional family owned and operated shipping companies. Today’s ships are commonly owned by multinational corporations and operated by multinationals.[citation needed] This fact makes the traditional flag of convenience argument of a national owner seeking an international jurisdiction largely irrelevant as there are few national owners.

Opponents argue that flags of convenience "do not enforce safety standards, minimum social standards or trade union rights for seafarers."[3] While this is true of some open registries, some feel it is difficult to substantiate generalized arguments against flags of convenience.[citation needed]

[edit] History

The Belen Quezada was the first foreign-owned vessel to register with the Panamanian registry in 1919. Several US ships followed suit in 1922. The registry slowly grew over the next 15 years, mostly due to transfers from European flags. In the late 1940s, several factors led American shipowners to become unhappy with the registry, and there became a demand for a new registry that could compete with Panama.

The Liberian Registry was formed in 1948 with the help of American businessmen. Stavros Niarchos, a Greek shipowner, registered the first ship (the World Peace) with Liberia in 1949. More shipowners followed suit, and the registry slowly grew and provided the competition that shipowners were looking for.

Currently the three largest ship registries are open registers, namely Panama, Liberia and the Bahamas. All of these are judged by international safety organizations as “white-listed” flags indicating above-average safety performance, even though the worst oil spills such as the Prestige and the Amoco Cadiz involved tankers registered in Bahamas and Liberia.

[edit] Opposition

The International Transport Workers' Federation (ITF) website says that “FOCs provide a means of avoiding labor regulation in the country of ownership, and become a vehicle for paying low wages and forcing long hours of work and unsafe working conditions. Since FOC ships have no real nationality, they are beyond the reach of any single national seafarers' trade union.”[citation needed] They also accuse such ships of having low safety standards and no construction requirements.

Other arguments against flags of convenience include evasion of taxes and lack of patriotism.[citation needed]

[edit] Support

Supporters of flags of convenience argue that where a vessel is engaged in international trade it should be free to register in the jurisdiction which best suits its commercial model. Proponents argue that the choice of flags allows companies to take advantage of another country's infrastructure and the efficiencies of effective and non-bureaucratic maritime administrations typically offered by the prominent open registers.

An open registry allows a Norwegian owner access to US public finance, Japanese shipbuilding expertise with Scottish and Hong Kong shipmanagers, while employing skillfull crews from Philippines, India or China. Before the open registry system, national flags required national ownership, national construction and national crew. Flags of convenience enable both lower costs of registration and the maintenance. This in turn reduces overall transportation costs.

Many nations, categorized either as open or national registries, effectively implement and enforce the international treaties of the International Maritime Organization, such as the International Convention for the Safety of Life at Sea (SOLAS), International Convention for the Prevention of Pollution from Ships (MARPOL), Standards of Training, Certification and Watchkeeping (STCW) and the International Ship and Port Facility Security Code (ISPS), all of which require minimum standards for vessels trading internationally. Further, several open registers including Liberia have ratified the International Labour Organization’s Consolidated Maritime Convention of 2006, which specifically protects the interest and rights of seafarers. National registries have yet to ratify this international treaty.

[edit] List of Flags of Convenience

Countries listed as having a flag of convenience by the ITF.

The International Transport Workers' Federation maintains a list of 32 registries it considers to be FOC registries. In developing the list, the ITF considers "ability and willingness of the flag state to enforce international minimum social standards on its vessels,"[4] the "degree of ratification and enforcement of ILO Conventions and Recommendations,"[4] and "safety and environmental record."[4] The following registries are on the ITF list (with figures sourced from the CIA World Factbook):

Flag of convenience registries and statistics (of ships of 1,000 GRT and greater)
Registry Ships Registered Foreign-owned ships Percent Foreign Foreign-owned ship profile Remarks
Flag of Antigua and Barbuda Antigua and Barbuda International Shipping Register 1,059[5] 1,021[5] 96% Australia 1, Colombia 1, Cyprus 2, Denmark 15, Estonia 15, France 1, Germany 891, Greece 3, Iceland 9, Latvia 9, Lebanon 1, Lithuania 6, Netherlands 19, Norway 7, NZ 2, Poland 2, Russia 5, Slovenia 6, Sweden 1, Switzerland 5, Turkey 7, UK 4, US 8, Vietnam 1[5]
Flag of the Bahamas Bahamas Maritime Authority 1,213[6] 1,134[6] 93% Angola 6, Australia 3, Belgium 15, Bermuda 12, Brazil 1, Canada 13, China 9, Croatia 1, Cuba 1, Cyprus 20, Denmark 66, Finland 8, France 43, Germany 40, Greece 214, Hong Kong 3, Iceland 1, Indonesia 3, Ireland 2, Italy 1, Japan 62, Jordan 2, Kenya 1, Malaysia 11, Monaco 11, Montenegro 2, Netherlands 24, Nigeria 2, Norway 232, Philippines 1, Poland 15, Russia 5, Saudi Arabia 15, Singapore 9, Slovenia 1, South Africa 1, Spain 11, Sweden 5, Switzerland 2, Taiwan 1, Thailand 1, Trinidad and Tobago 1, Turkey 5, UAE 20, UK 68, US 162, Uruguay 1, Venezuela 1[6] Flag-state self assessment.
Flag of Barbados Barbados Maritime Ship Registry 71[7] 67[7] 94% Bahamas, The 1, Canada 9, Greece 11, India 1, Lebanon 1, Monaco 1, Norway 35, Sweden 5, UK 3[7]
Flag of Belize International Merchant Marine Registry of Belize 261[8] 217[8] 83% China 107, Croatia 1, Cyprus 1, Estonia 1, Hong Kong 5, Iceland 1, Italy 4, Japan 2, South Korea 4, Latvia 14, Norway 3, Peru 1, Philippines 1, Russia 39, Singapore 3, Spain 2, Turkey 11, Ukraine 10, UAE 4, US 3[8]
Flag of Bermuda Bermuda Department of Maritime Administration 133[9] 126[9] 95% Australia 4, Belgium 3, China 10, France 1, Germany 21, Greece 3, Hong Kong 4, Ireland 1, Israel 3, Japan 1, Nigeria 11, Norway 5, Singapore 1, Sweden 15, UK 20, US 23[9]
Flag of Bolivia Bolivia 25[10] 9[10] 36% Argentina 1, China 1, Egypt 1, Iran 1, Italy 1, Singapore 1, Syria 1, Taiwan 1, Yemen 1[10] Bolivia is a landlocked nation
Flag of Cambodia International Ship Registry of Cambodia 586[11] 463[11] 79% Canada 6, China 166, Cyprus 9, Egypt 14, Estonia 1, Gabon 1, Greece 5, Hong Kong 11, Indonesia 1, Japan 3, South Korea 29, Latvia 2, Lebanon 7, Nigeria 2, Romania 1, Russia 112, Singapore 2, Syria 32, Taiwan 1, Turkey 20, Ukraine 27, UAE 2, US 6, Yemen 3[11]
Flag of Cayman Islands Cayman Islands Shipping Registry 124[12] 122[12] 98% Denmark 3, Germany 17, Greece 23, Italy 10, Japan 6, Norway 2, Singapore 10, Sweden 1, UK 9, US 41[12]
Flag of the Comoros Maritime Administration of the Union of Comoros 144[13] 70[13] 49% Bangladesh 1, Bulgaria 1, Cyprus 1, Greece 8, India 2, Kenya 1, Kuwait 1, Lebanon 5, Norway 1, Pakistan 2, Philippines 1, Russia 9, Saudi Arabia 1, Syria 8, Turkey 8, Ukraine 13, UAE 5, US 2[13]
Flag of Cyprus Republic of Cyprus Department of Merchant Shipping 868[14] 724[14] 83% Austria 1, Belgium 1, Canada 2, China 10, Cuba 2, Denmark 1, Estonia 5, Germany 197, Greece 292, Hong Kong 2, India 1, Iran 2, Ireland 1, Israel 4, Italy 5, Japan 19, South Korea 2, Latvia 1, Lebanon 1, Netherlands 23, Norway 17, Philippines 1, Poland 18, Portugal 1, Russia 50, Singapore 1, Slovenia 4, Spain 7, Sweden 2, Switzerland 3, Syria 2, Turkey 1, Ukraine 6, UAE 10, UK 21, US 8)

registered in other countries: 133 (Antigua and Barbuda 2, Bahamas 20, Belize 1, Cambodia 9, Comoros 1, Georgia 1, Gibraltar 5, Greece 5, Isle of Man 4, Liberia 5, Malta 15, Marshall Islands 39, Norway 2, Panama 15, Russia 2, Samoa 1, St Vincent and The Grenadines 3, Turkey 2, UK 1, unknown 1[14]
Flag of Equatorial Guinea Equatorial Guinea 1[15] 0[15] 0%
Flag of France French International Ship Register 141[16] 56[16] 40% Belgium 6, China 5, Denmark 3, Germany 1, Italy 2, Japan 5, Norway 17, NZ 1, Saudi Arabia 1, Singapore 2, Sweden 10, Switzerland 3)

registered in other countries: 145 (Antigua and Barbuda 1, Australia 1, Bahamas 43, Belgium 1, Bermuda 1, Cameroon 1, Gibraltar 1, Hong Kong 1, Indonesia 1, Isle of Man 2, Italy 5, South Korea 8, Liberia 5, Luxembourg 14, Malta 4, Morocco 13, Netherlands 1, Norway 3, Panama 15, Singapore 1, St Vincent and The Grenadines 7, Taiwan 1, UK 9, Wallis and Futuna 6[16]
Flag of Germany German International Ship Register 382[17] 7[17] 2% China 2, Finland 4, Ireland 1[17]
Flag of Georgia (country) Georgia 209[18] 180[18] 86% Albania 2, Azerbaijan 1, China 4, Cyprus 1, Egypt 14, Germany 2, Greece 7, Lebanon 3, Monaco 10, Romania 15, Russia 17, Slovenia 2, Syria 54, Turkey 23, Ukraine 24, UAE 1[18]
Flag of Gibraltar Gibraltar Registry of Shipping 216[19] 201[19] 93% Belgium 3, Cyprus 5, Denmark 9, Finland 3, France 1, Germany 117, Greece 8, Iceland 1, Italy 1, Netherlands 11, Norway 27, Sweden 10, UAE 2, UK 3[19]
Flag of Honduras Honduras 126[20] 40[20] 32% Bangladesh 1, Canada 1, China 3, Egypt 4, Greece 1, Hong Kong 1, Israel 1, Japan 4, South Korea 6, Lebanon 2, Mexico 1, Singapore 10, Taiwan 2, Tanzania 1, US 1, Vietnam 1[20]
Flag of Jamaica Jamaica Ship Registry 13[21] 12[21] 92% Denmark 1, Germany 1, Greece 8, Latvia 2[21]
Flag of Lebanon Lebanon 35[22] 3[22] 9% Greece 2, Syria 1[22]
Flag of Liberia Liberian International Ship and Corporate Registry 1,948[23] 1,904[23] 98% Argentina 3, Australia 2, Belgium 1, Brazil 3, Canada 3, China 32, Croatia 5, Cyprus 5, Denmark 12, Estonia 1, France 5, Germany 728, Gibraltar 7, Greece 311, Hong Kong 21, India 2, Indonesia 1, Israel 9, Italy 31, Japan 111, South Korea 4, Kuwait 1, Latvia 15, Lebanon 2, Mexico 1, Monaco 8, Netherlands 28, Norway 42, Poland 14, Qatar 2, Russia 87, Saudi Arabia 24, Singapore 42, Slovenia 1, Sweden 11, Switzerland 11, Taiwan 82, Turkey 7, Ukraine 24, UAE 22, UK 74, US 103, Uruguay 3, Vietnam 3[23]
Flag of Malta Malta Maritime Authority 1,281[24] 1,197[24] 93% Austria 1, Azerbaijan 3, Bangladesh 3, Belgium 10, Bulgaria 15, Canada 15, China 13, Croatia 12, Cyprus 15, Denmark 10, Estonia 7, France 4, Germany 67, Greece 448, Hong Kong 1, Iceland 7, India 3, Iran 24, Israel 21, Italy 45, Japan 3, South Korea 3, Latvia 36, Lebanon 12, Libya 3, Monaco 1, Netherlands 3, Norway 71, Pakistan 2, Poland 25, Portugal 3, Romania 10, Russia 66, Slovenia 3, Spain 1, Sweden 1, Switzerland 22, Syria 4, Turkey 143, Ukraine 28, UAE 10, UK 12, US 11[24]
Flag of the Marshall Islands International Registries, Inc (Marshall Islands) 902[25] 857[25] 95% Australia 1, Belgium 1, Bermuda 5, Canada 4, Chile 4, China 3, Croatia 4, Cyprus 39, Denmark 9, Finland 2, Germany 214, Greece 226, Hong Kong 4, Italy 3, Japan 5, South Korea 3, Latvia 10, Malaysia 3, Monaco 7, Netherlands 5, Norway 62, Romania 1, Russia 4, Saudi Arabia 4, Singapore 12, Slovenia 3, Spain 3, Sweden 1, Switzerland 14, Turkey 41, UAE 14, UK 17, US 129[25]
Flag of Mauritius Ministry of Public Infrastructure, Land Transport & Shipping 5[26] 2[26] 40% India 2[26]
Flag of Mongolia Mongolia Ship Registry 73[27] 62[27] 85% Bulgaria 2, China 3, Hong Kong 1, Japan 1, Lebanon 1, Malaysia 1, Russia 17, Singapore 12, Syria 1, Thailand 1, Ukraine 3, UAE 5, Vietnam 14[27] Mongolia is a landlocked nation
Flag of Burma Myanmar (Burma) 33[28] 8[28] 24% Germany 5, Japan 3[28]
Flag of the Netherlands Antilles Netherlands Antilles 138[29] 125[29] 91% Belgium 1, Cuba 1, Denmark 1, Germany 48, Netherlands 53, Norway 5, Sweden 3, Turkey 12, US 1[29]
Flag of North Korea North Korea 171[30] 29[30] 17% Egypt 1, India 1, Israel 1, Lebanon 3, Lithuania 1, Pakistan 1, Romania 6, Russia 1, Syria 7, Turkey 1, UAE 4, Yemen 2[30]
Flag of Panama Autorídad Maritima de Panamá 5,764[31] 4,949[31] 86% Albania 1, Argentina 8, Australia 4, Bahamas 2, Bangladesh 1, Belgium 11, Bulgaria 1, Canada 17, Chile 8, China 473, Colombia 4, Croatia 6, Cuba 11, Cyprus 15, Denmark 32, Dominican Republic 1, Ecuador 2, Egypt 13, Estonia 3, France 15, Gabon 1, Germany 38, Greece 505, Hong Kong 137, India 25, Indonesia 37, Iran 4, Ireland 1, Israel 2, Italy 10, Jamaica 1, Japan 2,151, Jordan 11, South Korea 316, Kuwait 1, Latvia 5, Lebanon 3, Lithuania 5, Malaysia 14, Maldives 1, Malta 2, Mexico 4, Monaco 11, Netherlands 14, Nigeria 6, Norway 60, Oman 1, Pakistan 5, Peru 15, Philippines 12, Poland 15, Portugal 9, Qatar 1, Romania 8, Russia 9, Saudi Arabia 14, Singapore 83, Spain 61, Sri Lanka 3, Sweden 9, Switzerland 26, Syria 24, Taiwan 306, Thailand 10, Turkey 53, Turks and Caicos Islands 1, Ukraine 8, UAE 108, UK 35, US 115, Venezuela 10, Vietnam 10, Yemen 5[31]
Flag of São Tomé and Príncipe São Tomé and Príncipe 7[32] 2[32] 29% Egypt 1, Greece 1[32]
Flag of Saint Vincent and the Grenadines SVG Maritime Administration 582[33] 536[33] 92% Austria 2, Bangladesh 1, Barbados 1, Belgium 9, Bulgaria 13, Canada 6, China 106, Croatia 7, Cyprus 3, Czech Republic 1, Denmark 16, Egypt 4, Estonia 20, France 7, Germany 3, Greece 81, Guyana 2, Hong Kong 7, Iceland 15, India 5, Iran 1, Israel 4, Italy 19, Kenya 2, Latvia 20, Lebanon 7, Lithuania 7, Malta 1, Monaco 6, Montenegro 1, Netherlands 5, Norway 19, Pakistan 1, Philippines 1, Poland 1, Portugal 1, Puerto Rico 1, Romania 1, Russia 19, Singapore 6, Slovenia 5, Sweden 2, Switzerland 12, Syria 11, Turkey 20, Ukraine 12, UAE 12, UK 9, US 21[33]
Flag of Sri Lanka Merchant Shipping Division 24[34] 6[34] 25% Germany 6[34]
Flag of Tonga Tonga 14[35] 3[35] 21% Australia 1, Switzerland 1, UK 1[35] International registry suspended in 2002.[36]
Flag of Vanuatu Vanuatu Maritime Services Limited 51[37] 51[37] 100% Australia 2, Belgium 4, Canada 5, Estonia 1, Japan 28, Poland 7, Russia 1, Switzerland 2, US 1[37]

[edit] See also

Nautical portal

[edit] References

 This article includes a list of references or external links, but its sources remain unclear because it has insufficient inline citations. Please help to improve this article by introducing more precise citations where appropriate. (April 2009)

Specific references:

  1. ^ Eitzen page
  2. ^ , "Flag of convenience". The American Heritage Dictionary of the English Language, Fourth Edition. Houghton Mifflin Company. 2004. http://dictionary.reference.com/browse/flag%20of%20convenience. Retrieved on 2007-05-04. 
  3. ^ What do FOC's mean to seafarers? International Transport Workers' Federation
  4. ^ a b c International Transport Workers' Federation. "What are Flags of Convenience?". http://www.itfglobal.org/flags-convenience/sub-page.cfm. Retrieved on 2007-05-04. 
  5. ^ a b c CIA World Factbook,Antigua and Barbuda, Transportation. Access date 2008-07-02.
  6. ^ a b c CIA World Factbook,Bahamas, The, Transportation. Access date 2008-07-02.
  7. ^ a b c CIA World Factbook,Barbados, Transportation. Access date 2008-07-02.
  8. ^ a b c CIA World Factbook,Belize, Transportation. Access date 2008-07-02.
  9. ^ a b c CIA World Factbook,Bermuda, Transportation. Access date 2008-07-02.
  10. ^ a b c CIA World Factbook,Bolivia, Transportation. Access date 2008-07-02.
  11. ^ a b c CIA World Factbook,Cambodia, Transportation. Access date 2008-07-02.
  12. ^ a b c CIA World Factbook,Cayman Islands, Transportation. Access date 2008-07-02.
  13. ^ a b c CIA World Factbook,Comoros, Transportation. Access date 2008-07-02.
  14. ^ a b c CIA World Factbook,Cyprus, Transportation. Access date 2008-07-02.
  15. ^ a b CIA World Factbook,Equatorial Guinea, Transportation. Access date 2008-07-02.
  16. ^ a b c CIA World Factbook,France, Transportation. Access date 2008-07-02.
  17. ^ a b c CIA World Factbook,Germany, Transportation. Access date 2008-07-02.
  18. ^ a b c CIA World Factbook,Georgia, Transportation. Access date 2008-07-02.
  19. ^ a b c CIA World Factbook,Gibraltar, Transportation. Access date 2008-07-02.
  20. ^ a b c CIA World Factbook,Honduras, Transportation. Access date 2008-07-02.
  21. ^ a b c CIA World Factbook,Jamaica, Transportation. Access date 2008-07-02.
  22. ^ a b c CIA World Factbook,Lebanon, Transportation. Access date 2008-07-02.
  23. ^ a b c CIA World Factbook,Liberia, Transportation. Access date 2008-07-02.
  24. ^ a b c CIA World Factbook,Malta, Transportation. Access date 2008-07-02.
  25. ^ a b c CIA World Factbook,Marshall Islands, Transportation. Access date 2008-07-02.
  26. ^ a b c CIA World Factbook,Mauritius, Transportation. Access date 2008-07-02.
  27. ^ a b c CIA World Factbook,Mongolia, Transportation. Access date 2008-07-02.
  28. ^ a b c CIA World Factbook,Myanmar, Transportation. Access date 2008-07-02.
  29. ^ a b c CIA World Factbook,Netherlands Antilles, Transportation. Access date 2008-07-02.
  30. ^ a b c CIA World Factbook,North Korea, Transportation. Access date 2008-07-02.
  31. ^ a b c CIA World Factbook,Panama, Transportation. Access date 2008-07-02.
  32. ^ a b c CIA World Factbook,São Tomé and Príncipe, Transportation. Access date 2008-07-02.
  33. ^ a b c CIA World Factbook,Saint Vincent and the Grenadines, Transportation. Access date 2008-07-02.
  34. ^ a b c CIA World Factbook,Sri Lanka, Transportation. Access date 2008-07-02.
  35. ^ a b c CIA World Factbook,Tonga, Transportation. Access date 2008-07-02.
  36. ^ "Tonga suspends registry". http://www.marinelog.com/DOCS/NEWSMMII/MMIIJan15b.html. Retrieved on 2007-05-05. 
  37. ^ a b c CIA World Factbook,Vanuatu, Transportation. Access date 2008-07-02.

General references:

[edit] External links

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