JULY 1981 - VOLUME 2 - NUMBER 7
Shipping: U.N. Conference Votes to Scrap "Flags of Convenience"
Carried by the votes of less-developed nations tired of being forced to use industrialized countries' ships in their international trade, a special United Nations conference on shipping held last month in Geneva moved to find ways of gradually phasing out the use of registry nations like Panama and Liberia as "flags of convenience" for other countries' ships.
"Flags , of convenience," which have long been denounced by the International Transport Workers Federation, allow shipping firms to avoid their own countries' labor and safety standards and tax laws by registering ships in nations where rules are more lax. Panama and Liberia, in particular, have made a business of the practice by structuring their shipping regulations so as to attract firms from many other nations to register ships there.
Delegates from developed countries at the U.N. shipping meeting pooh-poohed the 4918 vote to gradually do away with "flags of convenience," alleging that no workable substitute can be found and that international bankers will pull out of ship financing if the guarantees of the "flags of convenience" system are taken away.
But U.N. spokespersons expressed hope that a compromise allowing more small nations to participate in the world shipping industry could be found-perhaps by encouraging nations which have large existing fleets to participate in joint ventures with other countries.