American Coastal Waters and Shorelines Protection Act Misses the Point
In the latest development to United States maritime policy, Congressman Steve Cohen has re-proposed the American Coastal Waters and Shorelines Protection Act – a bill that would require offshore vessels drilling in U.S. waters to be nationally flagged.
On his website, Congressman Cohen explains his rationale for the bill, believing it “would create jobs, strengthen the domestic maritime industry and safeguard American workers and the environment,” and given our knowledge of the maritime industry, the OGSR staff has the following response to Cohen and his plan.
First, protectionist regulations like this proposal and the Jones Act have actually proven to inhibit the U.S. maritime industry’s ability to grow and compete internationally. Scott Bergeron, President of the Liberian Registry, writes in his editorial "Ship registry performance is not academic," "Protectionist measures such as the Jones Act in the US only serve to fail that which they seek to protect. Should the EU establish strict cabotage rules that go against the macroeconomic realities of shipping, it will see the same flight from shipowning that the US has." In other words, the countries are better off using a more free market-based approach to their maritime policies. The Liberian Registry, which does use this economic model, is the second largest flag state in the world as measured by gross tonnage - so Bergeron knows what he’s talking about.
Second, we are concerned about the misconceptions Cohen and others have about the relationship between type of registry and vessel quality. Cohen uses the outdated term “flags of convenience” to argue that what should more accurately be referred to as open registries (such as Liberia) adhere to lesser standards than national flags in the interests of maximizing profits. However, type of registry and performance are not necessarily related. Also in his editorial, Bergeron describes this assumption as a “lazy generalization”: “The sooner we accept that there are good and bad national and open registries, and that ship registries are not bad simply by virtue of not being national registers, the sooner we can address the issue of poorly performing administrations.” It is worth nothing that Liberia has also been placed on the top of every industry White List, demonstrating that profit and standards are not mutually exclusive. If that is not enough evidence, the US Center for Freedom and Prosperity published a study concluding that the market competition open registries face gives them the incentive to provide better service (source).
Particularly frustrating about Cohen’s rationale is his citation of last year’s Deepwater Horizon accident as a way to garner support for his plan. He implies that had the vessel had been registered in the United States rather than the Marshall Islands, the spill could have been prevented. This seems an ill-founded attempt to invoke emotional support for his plan. The issues that influenced the Horizon incident are more complex than Cohen describes them - to place the blame entirely on the Marshall Islands Registry is unfair. Notably, in US Coast Guard Commandant Admiral Papp’s recent final report, he concludes that the Joint Investigation Team report "fails to identify any instance where either of the recognized organizations acting on behalf of the Marshall Islands failed to meet the international guidelines in their survey of the Horizon." In other words, any failure to identify potential deficiencies on the Horizon prior to the spill more largely reflected shortcomings of global vessel inspection system as a whole - not just the fact that the rig was registered with an open flag - and the best way to prevent future incidents like this one would be to direct effort toward resolving these shortcomings.
We also remind Congressman Cohen that the Marshall Islands Flag is also at the top of every White List, including the United States’ Qualship 21 Initiative, for which it has qualified for the past seven years.
Overall, we find it discouraging that officials are continuing to propose policies based on misconceived understandings of the correlations between type of registry, quality and efficiency.
What are your thoughts on the issue? Share your thoughts in the comments or send them to Congressman Cohen directly.
