UN CONVENTION ON SHIPPING

UN CONVENTION ON SHIPPING BY NEERU AND RAJDEEP
· UNCTAD
· Develop country’s hegemony in shipping
· Complaints against conference system
· Battle for liner code
· UN Convention-The final act
· Convention on liner code: Highlights


UNCTAD
[United Nations Conference on Trade and Development]

UNCTAD was establish in the year 1964.One special feature is that, it has a committee on shipping, which deals mainly with the commercial and international trade aspects of shipping.
The work programme in the field of shipping adopted by the UNCTAD‘s committee on shipping at the committees first session held from eight to 23rd Nov. 1965 and at its special session held from 18th to 25th July 1966 and as amended at subsequent sessions constitutes the foundation of the numerous reports and studies on various aspects of shipping and shipping economics prepared and issued by the unctad.
Before establishment of the unctade of few shipping economist and the institute of shipping economist at Bergen in Norway and the institute of shipping economist at Bremen in German had brought out very valuable studies on some aspect of shipping and shipping economist. The reports and the studies prepared by the unctad secretariat in pursuance of the work programme in the field of shipping admirably further the cause of economist of shipping in as much as they covered wide and various aspects of shipping and there economist significance.
The research and studies included in the work program adopted by the unctad committee on shipping cover the following topics:

Establishment of National and Regional Consultation Machinery;
Level and structure of Freight Rates, Conference Practices and Adequacy of Shipping Services;
Improvement of port and connected facilities;
Establishment of merchant marines in developing countries;
Technological program of shipping;
Review of current and long-term aspects of maritime in shipping;
International seminars on shipping economics; and
International legislation on shipping.





Developed Countries Hegemony in Shipping

Although many developing countries were aware that the development of their shipping industry world contributes their economic growth, the shipping circles in the developed countries had propagated many misconceptions and myths. The later contended that the establishment of shipping industries by the developing countries was insufficient of their scarce of their resources, which could be more beneficially employed by them in the improvement of their infrastructure such as ports. Such connection is move by the developing countries to develop their shipping; they argued, would trade and were not in interest of world economy. Shipping, according to them was a highly capital-incentive and sophisticated industry in the provision of which developed countries had a great economic advantage over developing countries. The specialization of developed countries in shipping was economically most desirable and viable and any interference with this state of affairs would be at the cost of the world trade and economy. The developed countries had convinced themselves that on the basis of “sound economic criteria”, the development of merchant marine by developing countries was not desirable.

Complaints against conference system
Conference system serves the general trade of the world and spreads in monopolistic and oligopolistic tentacles.
The most importance institutional arrangement in shipping which preponderantly influences and acquisition and operation of liner ships, freight rate and important aspects of carriage of cargo in liner trades in the conference system, which has been in existence for a country. Although world sea-borne system, which is carried by linear ships, in much best in quantity than world sea-borne trade in dry bulky cargo and in oil cargoes, it far out weighs other cargoes in value.conferances which consisted almost exclusively until nineteen-fifties and thereafter predominantly of shipping lines from developed countries, possess semi-monopoly powers, and they control entry of new shipping companies into linear trades, control competition among their members and by competitive action among their member eliminate outside competition. This has the effect of preventing new shipping lines from participating in the trades and also of fixing and setting the freight rates, of adopting practices and of providing services which in many case of providing services which in many cases were not in the best interests of the trades to which they catered.
The developing countries were adversely affected in two ways.
Firstly, they could not build up liner fleets for participation in their own trades.
Second, their import and export trades also suffered because the conferences were in a very strong position and the shippers or consignees of cargo who were unorganized could not negotiate on equal terms with the conferences. The shipping circles and even the government of the developed countries resented the criticism on the ground that the critics did not understand the basic tenets of shipping economics in regard to provision of regular liner services.

Most of the complaints against the conference related to:
1. Fright rates: General insurance of freight rates, fixation of specific freight rates, and promotional freight rates;
2. Participation and share: Participation of share of national shipping line; that is; entry into conferences covering trades;
3. Unfair clauses: Unfair clauses in loyalty agreements and imbalance of obligations between shippers and ship-owners.
4. Inadequacy shipping: The inadequacy of shipping services, e.g. failure to serve particular port or range of ports.
5. Quality of shipping services: The quality of shipping services particularly the suitability of vessels and their cost of operation.
6. Unreasonble withholding: The unreasonable withholding of dispensation to use non-conference vessels.

In some circumstances, a shipping may not have an option on the vessels to be used. Because of certain laws enacted to protect a country’s interest, mandatory use of a particular vessel is not uncommon.

In general the rates changed by U.S. conference lines are higher than threats changed by lines of other nations. Operators of certain countries are able to charge lower rates because of subsidies and support received from their government. Some ships at one time were able to quote rate as much as two-thirds lower than U.S. conference lines published prices. Subsequently, conference lines decided to give illegal rebates to major customers in order to win bank cargo shipments lost to the soviets.
Recognizing both that nations have shipping interests and that subsidies cause problem, the UNCTAD proposed the UNCTAD code of liner conduct.
According to UNCTAD code. Each trading partner is allowed to reserve 40% of the total liner cargo for its national flag lines and to allocate 20% cargo to third flag operators





Battle for code of conduct:
The battle for the code began in right earnest at UNCTAD-3rd in Santiago in April-May 1972. It was at that conference that developing countries were able to agree upon the unified draft of a code of conduct for liner conferences and get it remitted to the UN general assembly for further necessary processing and adoption as an international convention any multilateral legally binding instrument.