FMC opens investigation into flagging practices

The Federal Maritime Commission is conducting an investigation to examine whether the vessel flagging laws, regulations, or practices of certain foreign governments create unfavorable shipping conditions in the foreign trade of the United States.

The Commission is concerned about the conditions created by the wide and uneven range of foreign vessel flagging laws, regulations, and practices. It notes that many foreign nations take great care in creating standards for vessels flagged by their registries. These standards ensure the efficient and reliable transit of goods throughout the ocean shipping supply chain. Other foreign countries, however, have engaged in a “race to the bottom”—a situation where countries compete by lowering standards and easing compliance requirements to gain a potential competitive edge. By offering to register and flag vessels with little or no oversight or regulation, countries may compete against one another to gain revenue from the associated fees and to minimize the expenses associated with inspecting vessels and