The Market Center Blog

Center for Freedom and Prosperity Foundation

For Immediate Release
Wednesday, August 18, 2004
202-285-0244
www.freedomandprosperity.org

Foundation Study Highlights Economic Benefits of Competitive Shipping Market, Condemns OECD/ITF
Attack Against Open Registries

August 18, 2004 (Washington, DC) - The Center for Freedom and Prosperity Foundation today released a study analyzing the impact of open registries on the global shipping market. These registries, maintained by about 30 countries, are open to shipowners from all nations and the study finds that they have boosted international trade and the world economy by reducing shipping costs and increasing efficiency in the industry.

"Open registries have been particularly beneficial to the United States, which is the world's largest exporter and importer," said Andrew Quinlan, president of the CF&P Foundation. "Moreover," he added, "open registries have good safety and security records - features that are very important to US policy makers."

CF&P Foundation's latest Prosperitas, "The Threat to Global Shipping from Unions and High-Tax Politicians: Restrictions on Open Registries Would Increase Consumer Prices and Boost Cost of Government," was written by Heritage Foundation Senior Fellow Daniel Mitchell.  Commenting on his study, Mitchell stated, "Unlike monopolistic national registries, open registries use a market-based model. And since they compete with each other to attract ships, this has led to better service for shipowners and more rational tax and regulatory systems."

Veronique de Rugy of the American Enterprise Institute warned that the anti-competition agendas of the Organization for Economic Cooperation and Development (OECD) and the International Transport Workers' Federation (ITF) are contrary to the interests of all trading nations. "Restricting open registries and returning to the days of high-cost, over-taxed national registries would throw sand in the gears of the global economy," she explained.

The OECD has targeted open registries as part of its anti-tax competition campaign and the ITF has been fighting against so-called flags-of-convenience since 1948. The International Maritime Organization, with the support of the United States government, has rejected these efforts to hinder international trade.

Link to full paper:
http://www.freedomandprosperity.org/Papers/shipping/shipping.shtml

Link to PDF version of paper:
http://www.freedomandprosperity.org/Papers/shipping/shipping.pdf

Executive Summary of Study:

"Open registries" for shipping have a beneficial impact on the global economy by competing to offer shipowners the best tax and regulatory environment combined with efficient service. This process of jurisdictional competition among ship registries has helped reduce costs in the shipping industry - with consumers reaping the lion's share of the benefit. Notwithstanding the benefits they generate for the global economy, open registries are being attacked on two fronts. The first attack comes from the Organization for Economic Cooperation and Development (OECD), acting on behalf of high-tax governments that maintain monopolistic "national registries." These registries tend to be much more expensive and much less efficient, so shipowners over time have been abandoning national registries to escape burdensome red tape and onerous taxation. The second attack comes from seafarer unions, coordinated and represented by the International Transport Workers' Federation (ITF). Unions wielded enormous power prior to the advent of open registries, in large part because they used their political muscle to persuade politicians to set rules for national registries that increased union leverage. The U.S. government has wisely resisted the anti-competitive agenda of the OECD and ITF. As the Maritime Administrator at the Department of Transportation correctly noted, "...it is not the policy of the United States to dictate where ship owners invest their money or register their ships."  Advocates of economic liberalization should support open registries. Free trade and free markets are good for the United States and good for the world economy.

For additional comments:

Andrew Quinlan can be reached at 202-285-0244, quinlan@freedomandprosperity.org
Dan Mitchell can be reached at 202-608-6224, dan.mitchell@heritage.org
Veronique de Rugy can be reached at 202-862-5800, vderugy@aei.org

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Center for Freedom and Prosperity Foundation
P.O. Box 10882
Alexandria, Virginia 22310
Phone: 202-285-0244
www.freedomandprosperity.org
cfp@freedomandprosperity.org

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