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Maritime Transport, the WTO, and Regional Trade Agreements: Too Many Cooks?

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Coherence and Divergence in Services Trade Law

Part of the book series: European Yearbook of International Economic Law ((Spec. Issue))

Abstract

Shipping is the most international of all industries, as well as being one of the oldest—and it is also one of the most complicated. This chapter examines, through historical, legal and economic lenses, whether and how RTAs (and PTAs) may facilitate international trade and enhance liberalisation of maritime transport service along with the GATS under the WTO framework. The relationship between the WTO and maritime transport regime can be traced back to the GATS and related maritime transport service negotiations. Even though shipping has been on the negotiating agenda since the 1980s, the GATS related negotiations on this sector turned out extremely frustrating. After exploring the status quo of the maritime transport services and their liberalisation under the GATS and RTAs, this chapter argues that the future liberalisation of maritime transport sector relies on efforts from both the WTO and RTAs. From an economic point of view, today’s trade relies on shipping to carry the goods around the world, because the trade is globalised, shipping needs such a global, multilateral framework which the WTO empowers. At the same time, shipping also needs regional, bilateral and local forums—RTAs (including PTAs)—through which Members share a high degree of commonality.

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Notes

  1. 1.

    UNCTAD (2018), Review of Maritime Transport, pp. 1–15. WTO (2001), Doc. S/CSS/W/59.

  2. 2.

    UNCTAD (2018), Review of Maritime Transport, pp. 1–15.

  3. 3.

    WTO (2001), Doc. S/CSS/W/59.

  4. 4.

    E.g. WTO I-TIP databases.

  5. 5.

    See details in Sect. 6.1.

  6. 6.

    Sturley (1991), p. 3.

  7. 7.

    Sturley (1991), pp. 3–15.

  8. 8.

    WTO (no date), https://docsonline.wto.org/.

  9. 9.

    Parameswaran (2010) and Zhao (2014, 2015).

  10. 10.

    WTO and World Bank, Services Databases “I-TIP-Services Portal” http://i-tip.wto.org/services/default.aspx. See “Users Guide” at https://www.wto.org/english/tratop_e/serv_e/itip_user_guide_e.htm.

  11. 11.

    ASEAN – China; Australia – Chile; Canada – Chile; Canada – Colombia; Canada – Honduras; Canada – Panama; Canada – Peru; Chile – China; Chile – Colombia; Chile – Costa Rica (Chile – Central America); Chile – El Salvador (Chile – Central America); Chile – Guatemala (Chile – Central America); Chile – Honduras (Chile – Central America); Chile – Japan; Chile – Mexico; Chile – Nicaragua (Chile – Central America); China – Costa Rica; China – New Zealand; China – Rep. of Korea; China – Singapore; Colombia – Mexico; Colombia – Northern Triangle (El Salvador, Guatemala, Honduras); Costa Rica – Peru; Costa Rica – Singapore; Dominican Republic – Central America – United States Free Trade Agreement (CAFTA-DR); East African Community (EAC); EFTA – Chile; EFTA – Colombia; EFTA – Hong Kong, China; EFTA – Korea, Republic of; EFTA – Singapore; EFTA – Ukraine; El Salvador- Honduras – Chinese Taipei; Guatemala – the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu; Hong Kong, China – Chile; Hong Kong, China – New Zealand; Iceland – China; India – Japan; India – Malaysia; India – Singapore; Japan – Australia; Japan – Mexico; Japan – Mongolia; Japan – Peru; Japan – Philippines; Japan – Switzerland; Jordan – Singapore; Korea, Republic of – Australia; Korea, Republic of – Chile; Korea, Republic of – Singapore; Korea, Republic of – US; Korea, Republic of – Viet Nam; Mexico – Central America; New Zealand – Chinese Taipei; New Zealand – Malaysia; Nicaragua and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu; North American Free Trade Agreement (NAFTA); Pakistan – China; Panama – Chile; Panama – Costa Rica (Panama – Central America); Panama – El Salvador (Panama – Central America); Panama – Guatemala (Panama – Central America); Panama – Honduras (Panama – Central America); Panama – Peru; Panama – Singapore; Panama and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu; Peru – Chile; Peru – China; Peru – Korea, Republic of; Peru – Mexico; Peru – Singapore; Singapore – Australia; Singapore – Chinese Taipei; Switzerland – China; Trans-Pacific Strategic Economic Partnership; Ukraine – Montenegro; US – Australia; US – Bahrain; US – Chile; US – Colombia; US – Jordan; US – Morocco; US – Oman; US – Panama; US – Peru; US – Singapore.

  12. 12.

    A full list of covered RTAs under I-TIP database (up to September 2016) can be found at http://i-tip.wto.org/services/Services_RTAs_covered.pdf.

  13. 13.

    UNCTAD (2018). http://stats.unctad.org/merchantfleet, http://stats.unctad.org/fleetownership.

  14. 14.

    See details on flagging out and open registry in Sect. 6.2.3.

  15. 15.

    UNCTAD (2018). http://stats.unctad.org/merchantfleet, http://stats.unctad.org/fleetownership.

  16. 16.

    UNCTADSTAT (no date). https://unctadstat.unctad.org/wds/ReportFolders/reportFolders.aspx.

  17. 17.

    See Sect. 4.3.

  18. 18.

    WTO (1996a). Doc.S/NGMTS/13, para 2.

  19. 19.

    WTO (1994). Marrakesh Agreement Establishing the World Trade Organization.

  20. 20.

    E.g. Zhao (2015); WTO (1996b), p. 1, para 1.

  21. 21.

    GATS Article XXIX.

  22. 22.

    World Bank (2019), Service Trade Restrictiveness Index Database http://iresearch.worldbank.org/servicetrade/default.htm#.

  23. 23.

    Degenhardt and Day (1985), p. 41. Mukherjee et al. (2013).

  24. 24.

    See GATS Article II.

  25. 25.

    Zhao (2015), pp. 60–118.

  26. 26.

    Consolidated GATS Schedules of Commitments and MFN exemptions (by country and sector) can be viewed and downloaded at Services Database http://i-tip.wto.org/services/Search.aspx.

  27. 27.

    WTO (no date), GATT (1001), Classification List, https://www.wto.org/english/tratop_e/serv_e/serv_sectors_e.htm.

  28. 28.

    GATT (1001), Classification List.

  29. 29.

    I-Tip database (2019).

  30. 30.

    See details in Sect. 5.

  31. 31.

    Zhao (2014), pp. 172–227.

  32. 32.

    See details in Sect. 4.4.

  33. 33.

    See details in Sects. 5.3–5.6. This categorising has been used by the WTO/GATT negotiations since the 1980s, see WTO (2013) doc. JOB/SERV/137.

  34. 34.

    List created by the current author. Source: Stopford (2009), p. 49.

  35. 35.

    Zhao (2014), pp. 172–227.

  36. 36.

    See details in Sect. 5.3.

  37. 37.

    See details in Sect. 6.2.3.

  38. 38.

    See also Parameswaran (2010), p. 306, footnotes 1437–1440. See the four modes in GATS Article I.2.

  39. 39.

    See Sect. 4.2.

  40. 40.

    Zhao (2015), pp. 60–118.

  41. 41.

    Zhao (2015), pp. 60–118. Parameswaran (2010).

  42. 42.

    GATT Articles I and III.

  43. 43.

    GATS Article II.

  44. 44.

    See Sect. 6.1.

  45. 45.

    See Sect. 4.5.

  46. 46.

    GATS Article XVII.

  47. 47.

    Emphases by this author.

  48. 48.

    See Sect. 4.6; Mattoo et al. (2018).

  49. 49.

    WTO (2013), doc. JOB/SERV/137.

  50. 50.

    WTO and World Bank (2016), http://i-tip.wto.org/services/Services_RTAs_covered.pdf.

  51. 51.

    Zhao (2019), http://i-tip.wto.org/services/SearchResultRTA.aspx.

  52. 52.

    I-Tip database on GATS (2019).

  53. 53.

    Zhao (2015).

  54. 54.

    See Sect. 6.1.

  55. 55.

    I-Tip database on GATS (2019).

  56. 56.

    See Sect. 4.5.

  57. 57.

    WTO (2005), Doc.WT/MIN(05)/DEC, page C-3, paragraph 9. Türk (2008), pp. 150–162.

  58. 58.

    WTO (2005), Doc.WT/MIN(05)/DEC, Annex C, page C-3, paras. 7, 11.

  59. 59.

    Türk (2008), pp. 151–153, 155.

  60. 60.

    “Friends’ groups” focus on specific sectors, such as air transport, maritime transport, but are not strictly plurilateral negotiating groups. Türk (2008), pp. 148, 159–161, 163.

  61. 61.

    Türk (2008), pp. 148, 159–160.

  62. 62.

    Türk (2008), pp. 158–159.

  63. 63.

    Türk (2008), p. 163.

  64. 64.

    WTO and World Bank (no date), I-Tip database.

  65. 65.

    USTR (no date), NAFTA, https://ustr.gov/trade-agreements/free-trade-agreements/north-american-free-trade-agreement-nafta.

  66. 66.

    I-Tip database on RTAs (2019).

  67. 67.

    Mukherjee et al. (2013).

  68. 68.

    Petrovena (1998), pp. 1039–1040.

  69. 69.

    United States, the Harter Act 1893, 27 Stat. 445 (1983). The Harter Act is currently codified at 46 U.S.C. app. §§ 190–196 (1998).

  70. 70.

    See also Sturley (1991), pp. 11–14.

  71. 71.

    Sweeney (1993), p. 1.

  72. 72.

    See Sturley (1991), p. 4.

  73. 73.

    E.g. WTO (1995), Doc.S/NGMTS/W/2/Add.8, p. 3. WTO (1995), Doc.S/NGMTS/W/2/Add.4, p. 8. WTO (1995), Doc.S/NGMTS/W/2/Add.21, p. 3. WTO (1995), Doc. S/NGMTS/W/2/Add.12, pp. 37–43. WTO (1995), Doc.S/NGMTS/W/2/Add.15, p. 4. WTO (1995), Doc.S/NGMTS/W/2/Add.22, p. 2. WTO (1995), Doc.S/NGMTS/W/2/Add.24, p. 6. WTO (1995), Doc.S/NGMTS/W/2/Add.23, p. 5. WTO & NGMTS (1995), Doc.S/NGMTS/W/2/Add.11, pp. 3–4. WTO & NGMTS (1995), Doc.S/NGMTS/W/2/Add.19, p. 4.

  74. 74.

    I-Tip database on GATS and RTAs (2019).

  75. 75.

    European Commission (no date), https://ec.europa.eu/trade/policy/in-focus/ceta/index_en.htm.

  76. 76.

    I-Tip database on GATS (2019).

  77. 77.

    China’s GATS Commitment; Japan’s GATS Commitment.

  78. 78.

    I-Tip database on GATS and RTAs (2019).

  79. 79.

    Parameswaran (2010).

  80. 80.

    These issues were initiated by a circulated EC Model Schedule, which was informally circulated among delegations shortly before the conclusion of the Uruguay Round among the participants. See WTO (1995), doc.S/NGMTS/W/2, p. 7. WTO (1996c), doc.S/L/27, p. 1, para 5.

  81. 81.

    Cf. the Rotterdam Rules.

  82. 82.

    OECD & WTO (1996), Doc.DSTI/SI/MTC(96)8, pp. 3–4. See also Parameswaran (2010), pp. 343–346.

  83. 83.

    E.g. WTO (1995), Doc.S/NGMTS/W/2/.

  84. 84.

    Uruguay Round (1991), Doc.MTN.GNS/W/60.

  85. 85.

    WTO (1995). Doc.S/NGMTS/W/2/.

  86. 86.

    See Sect. 4.2.

  87. 87.

    See Sect. 4.5.

  88. 88.

    See Sect. 5 for details.

  89. 89.

    I-Tip database.

  90. 90.

    Zhao (2015).

  91. 91.

    These entities have different legal basis, governance structures, funding, mandates and scopes.

  92. 92.

    UNCTAD, http://unctad.org/en/Pages/Home.aspx.

  93. 93.

    OECD, http://www.oecd.org/home/0,2987,en_2649_201185_1_1_1_1_1,00.html. China is not an OECD country.

  94. 94.

    United States Economic and Social Council (ECOSOC), http://www.un.org/en/ecosoc/.

  95. 95.

    UNCITRAL, http://www.uncitral.org/uncitral/en/index.html.

  96. 96.

    International Maritime Organization (IMO), http://www.imo.org/Pages/home.aspx.

  97. 97.

    Zhao (2015).

  98. 98.

    Mukherjee et al. (2013), p. 199.

  99. 99.

    Mukherjee et al. (2013).

  100. 100.

    Levinson (2010), pp. 1, 15, 58.

  101. 101.

    Harlaftis and Theotokas (2015), pp. 8–12.

  102. 102.

    Gilmore and Black (1975), p. 16.

  103. 103.

    E.g. GATT, TRIPS Agreement, GATS, and the DSU.

  104. 104.

    See Sects. 6.2–6.3.

  105. 105.

    See Sect. 5.6.

  106. 106.

    See Sects. 4 and 5.

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Author information

Authors and Affiliations

  1. School of Law, Middlesex University, London, UK

    Lijun Zhao

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  1. Lijun Zhao
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Correspondence to Lijun Zhao .

Editor information

Editors and Affiliations

  1. Faculty of Law, University of Erlangen-Nuremberg, Erlangen, Germany

    Rhea Tamara Hoffmann

  2. Faculty of Law, University of Erlangen-Nuremberg, Erlangen, Germany

    Markus Krajewski

Appendices

Appendix 1: Services Sectoral Classification List Regarding Transport Services (Which Include Maritime Transport Services)

1.1 Sectors: Reports – Commitments – Member × Sector (GATS)

  1. 11.

    TRANSPORT SERVICES

    1. 11.A

      Maritime Transport Services

    2. 11.B

      Internal Waterways Transport

    3. 11.C

      Air Transport Services

    4. 11.D

      Space Transport

    5. 11.E

      Rail Transport Services

    6. 11.F

      Road Transport Services

    7. 11.G

      Pipeline Transport

    8. 11.H

      Services auxiliary to all modes of transport

    9. 11.I

      Other Transport Services

HC:

Horizontal Commitments

Source: the WTO

The above classifications was first used in 1991 during the preparatory negotiations for GATS. The existing Member countries’ services Schedule of Commitment have utilised the above classifications, and up to date there have been 63 GATS Schedules of Commitments addressing maritime transport sector. Moreover, this classification has also been utilised by critical majority of RTAs and PTAs.

Appendix 2: Table on Open Registry (also Known as ‘Flag of Convenience’)

Open registry

The shipping company

The host country

Exemplars

• Shipowners who choose to flag out in open registry countries

• Ship operators who runs bareboat chartered vessels and choose to flag out in open registry countries

• The first states to open their registers were those over which the US had considerable influence. Initially, they were few, the best known being Liberia, Panama and Honduras.

• Today, world top 10 open registries are: Panama, Liberia, Marshall Islands, Hong Kong (China), the Bahamas, Singapore, Malta and Cyprus. Roughly 70 % of the world fleet are flagged with open registries.

Proponents

• Reduce tax liability

• Lower registration fee

• Lower crewing costs, because manning of ships by non-nationals is freely permitted and, thus a ship owner/operators can employ lower-cost (probably foreign) crews

• Flexibility in certain aspects of the corporate structure (e.g. anonymity, through permitting greater use of bearer shares whereby the identity of the ultimate owner of the ship may be hidden)

• A new area of business activity for its national economy

• A new, relatively modest, revenue source (e.g. registration fee and tax)

Opponents

• Decline in the need for crews from the states whose flags the ships had previously flown.

• Lowered the shipping safety standards for the international community and the port state, because the shipowner/operator try to reduce the operation cost

• Bigger ships, smaller crew: a formula for disasters

  1. Table complied by the current author. Source: Mukherjee et al. (2013), pp. 205–206

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Zhao, L. (2020). Maritime Transport, the WTO, and Regional Trade Agreements: Too Many Cooks?. In: Hoffmann, R., Krajewski, M. (eds) Coherence and Divergence in Services Trade Law. European Yearbook of International Economic Law(). Springer, Cham. https://doi.org/10.1007/978-3-030-46955-9_10

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