The upcoming European Union Emissions Trading System (ETS) amounts to a regional “tax on trade” that risks being copied by other regions, claims International Chamber of Shipping (ICS) deputy secretary general Simon Bennett.
His comments were made at the North Bund Forum in Shanghai, where the shipowners’ association has just opened a new office.
Highlighting the threat posed to shipping by regional regulation, Bennett pointed to the upcoming ETS, which the EU has introduced as a financial incentive to decarbonise.
“In effect, the EU is applying an extra-territorial jurisdiction by charging non-EU-flag ships money for CO2 emissions, which occur throughout ocean-going voyages which may take place many thousands of miles away from Europe,” Bennett said.
He described the EU ETS as the “elephant in the room” in IMO discussions on achieving an international agreement on eliminating greenhouse gas emissions.
“This unilateral regime will be applied to non-EU ships — including Chinese ships — which call at EU ports from 2024 and which, to avoid legal penalties or their ships being detained in EU ports, must purchase allowances from the EU carbon market,” Bennett said. “In other words, this is a tax on international maritime trade, with a risk it might be copied by other nations who see a revenue-making opportunity.”
He cited other regional regulations as areas for concern.
He said that despite the recent ratification of the IMO-agreed Hong Kong International Convention on Safe and Environmentally Sound Recycling of Ships, the EU is pushing on with updating its regional Ship Recycling Regulation, which applies to ships flagged in the EU.
In another example, he said the UK’s decision to enforce its minimum wage standards on foreign-flagged ships calling at UK ports clashed with International Labour Organization’s minimum wage agreement for seafarers.
“The primary concern of ICS is the important legal principles involved and the implications globally for the further erosion of flag state rights under the United Nations’ Law of the Sea,” Bennett said.
“ICS fears that unless other governments protest to the UK government about this challenge to their sovereignty as shipping flag states, there is a danger that the rest of the world will be perceived as having acquiesced to this unwarranted expansion of coastal state jurisdiction,” he said.
Bennett’s other concern is that the IMO’s role in providing international regulation for the shipping industry is being challenged by the increasing division of the regulator into political blocks.
He cited the EU acting as a block since the early 2000s as a prime example.
