Trade in Maritime Transport Services: The Regulatory Framework

Abstract

The actual maritime transport service involves the movement of goods by vessel between the port of embarkation, where the merchandise is received from the exporter/seller, and the port of destination, where the merchandise is claimed by the importer/buyer. The shipping service is international if performed from the port of one country to the port of another country, i.e. for the provision of a complete service, a ship must enter the ports (or offshore terminals) of at least two countries. This implies that two sovereign regulatory systems are involved whenever an international maritime transport service is supplied. It is from this unique feature that Schrier, Nadel and Rifas derive the notion of “joint sovereignty” in trade in international shipping (and air transport) services: while in principle only one set of national laws and regulations apply to service transactions at a time, allowing countries to unilaterally impose restrictive measures on market access without the consent of foreign governments, international transport does not know a genuinely domestic market. If an economy seeks to employ its own national fleet to supply a foreign market, it must still gain at least the tacit consent of its trading partner for its vessel must gain access to that country’s port in order to provide the service. In the case of crosstraders, i.e. carriers plying between ports of two countries without flying the flag of either one, the need for cooperation and agreement is even more obvious. Therefore, one might say that there is a “natural” need for liberalization in the maritime transport sector that can be pursued most efficiently on the international level.