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    1. Introduction

    Transport industry operates under the regulatory regimes of different jurisdictions.

    Every aspect of transportation sectors is governed by different international

    organizations 1, regional organizations, 2 Regional Memorandums of Understandings

    (MoDs) on Port State Control, bilateral agreements, and national laws of various

    countries. Considering the complexities of international transport services, particularly

    concerning its already well-established and wide-ranging regul_:ltory, regimes, the

    negotiations within WTO framework failed to make a substantial progress, as narrated in

    the earlier chapter.

    The complexity of this sector can also be attributed to the diversity in the market

    structure of international transport. The maritime transport market is differentiated by the -- -····--~--......,~" ~~ type of ship (Liner, Tramp, or Tanker), the kind of trade (general cargo, dry and liquid

    ----..:_....------- -- - bulk cargo, live cargo etc.) and the geographical route. It is run by diverse individuals-..______--- the ship-owners, brokers, freight forward operators, shipbuilders and bankers; who

    together carry out each year, the task of transporting more than 3000 million tons of

    cargo by sea (Stopford, 1988). It embraces not only ships of varied type, design, and

    employment but also the cargo they carry, the origin and destination of those cargoes, the

    routes traveled, the men who operate them afloat and ashore, laws relating both to the

    seamen and the ship, insurance, and governments of various countries. The conditions

    that govern its operation in one sector do not necessarily apply to another.

    Many aspects of maritime transport process have their roots in history

    (McDowell, 1954). Through a consistent usage of sea as a highway, usages reflecting the

    conduct of States in maritime affairs emerged. The usages were later concretized into

    customs of international law, thus creating rights and duties attached to the peaceful uses


    International Civil Aviation Organisation (ICAO), International Labour Organisation (ILO), International Maritime Organisation (IMO), the United Nations (UN), United Nations Conference on Trade and Develoment (UNCTAD), United Nations Commission on International Trade Law (UNCITRAL) etc. Organisation for Economic Co-operation and Development (OECD), European Union (EU) etc.


  • of the ocean in merchant transport. The legal superstructure exists as a result of early

    state conduct which created rights and duties of the subjects of international law (Mahalu,


    Before proceeding to the discussion of Transportation Services under the GATS

    framework, it is pertinent to discuss the historical development of maritime industry and

    understand its nature, composition, and functioning, and the existing legal norms that are

    presently governing this sector. This chapter is mainly divided into four sections: The

    first section deals with the origin and history of maritime transport services. The second

    section looks at the effects of technological development on this sector. The third section

    deals with the legal regime and the institutional mechanism which is currently governing

    this sector (an effort is made to discuss the legal regime according to the way in which

    the maritime sector is organized in the GATS maritime negotiations i.e. the "four pillars"

    of maritime transport).3 And the fourth section deals with the concerns of developing

    countries and their aspirations for developing their own merchant fleet.

    2. Origin and History Of Maritime Transport

    For centuries ships were main instruments of commerce and communications

    between nations. As a result several aspects of the shipping process have their roots in

    history. Though the development of shipping was motivated by private enterprises and

    initiative, over a period of time however, it called for government regulations,

    interventions, and financial assistance in the form of subsidies, concessions, etc., because '---------- ----------------

    of its importance and contribution to the national economies.

    Crete and Phoenicia were considered as the earliest maritime powers4 but modem

    scholars contest this claim, they assert that India and Egypt were the earliest maritime

    3 Auxiliary services are not discussed separately because they are covered under the discussion concerning multimodal transport. The small island of Crete situated on the Mediterranean developed as a maritime power from 3500 B.C. and traded with Egypt, Greece, and Syria. Their Maritime Supremacy started declining about 1400 B.C. and were succeeded by the Phoenicians, who lived in the narrow strip of land on the coastline of Syria and Palestine. Being dependant on trade for a living, the Phoenicians developed not only caravan routes, but also used sea extensively for transportation. Siddon and Tyre were major maritime ports of Phoenicia. The Phoenicians supplied Egyptian grain to Greece. They were expert ship builders and furnished the war ships to Assyrians, Babylonians, and Macedonians. In about 1000 B.C. the Phoenicians ventured beyond the Mediterranean sea and traded with England and Spain. Their supremacy as a maritime power lasted till 800 B.C. (Ram, 1969).


  • powers (Ram, 1969). Earliest man grasped the floating log (dug outs, log rafts, and boats

    made of hides stretched over a frame), it took many centuries to develop sailing ships-

    the Egyptians invented the sailing ships in 3500 B.C. (The World Book Encyclopedia)

    which depended on the direction of the wind and the polar star was the only guide to the

    sailors for direction.5

    After the decline of the Greeks in the 3rd Century B.C., the Romans became

    supreme, and the Mediterranean Sea became a Roman Lake for all purposes. The period

    of Roman maritime supremacy saw codification of maritime law, a process which started

    with the Greeks. The code was based on the ancient laws and customs of the sea

    formulated by the inhabitants of the Islands of Rhodes. Seamen wages, rights of

    merchants, ship-owners' responsibilities for passengers and cargo, punishment for

    offences from piracy to negligence etc., were laid down by the Roman law. These laws

    survived the Roman Empire and were incorporated in the laws of Oleron, in the 1100 '-..--------

    A.D., which was to become the foundation of modem maritime law.

    The sailing ships later in history went through several structural improvements6

    accompanied by other gadgets such as charts and mariners compass 7 and the invention of

    cross-staff which enable the accurate measurement of the altitude of the pole star. Now

    the world has come a long way from catamarans and sailing ships to VLCC and OBOC.8

    The discoveries of 15th century A.D. marked a definite break in the history of the

    evolution of shipping as an industry. The ancient channel of trade from the Orient via the

    Mediterranean to Atlantic Europe was destroyed by the capture of Constantinople by the

    Turks in 1453, one of the major links between the East and the West. The Ottomans

    (Turks) also succeeded in blocking the routes across Syria (alternate route); leaving the

    Isthmus of Suez as the only means of access for oriental goods. The Egyptians imposed

    5 During the period of sailing ships, countries discovered and conquested other countries and made them to be their colonies and established trade relationships among them. Pytheas of Masil (modem Marseilles) then a flourishing Greek colony is said to have discovered the Britain (Ram, 1969).

    6 The sailing ships were dependent upon the wind direction and the sailors were guided by the pole star till the 15th century. The structural developments such as the perfection of the stern rudder which gave greater control over ship and the single mast sailing was replaced by two mast sailing and later by three masts which helped in increasing in speed.

    7 Cartographers of Venice are said to have produced excellent charts and mariners compass which was originally a Chine invention that came to Europe through Arabs (Ram, 1969). Very Large Crude Carrier and Ore Bulk Oil Carrier.


  • higher dues on the transit of oriental goods. These events brought economic difficulties to

    the Mediterranean trading cities, and caused the Western European powers to intensify

    their search for new sea-route to the sources of eastern trade.

    In 1486, Bartholomew Diaz, the Portuguese Navigator rounded the Cape of Good .._ ------ ~

    Hope (South Africa) and prepared the way. In 1498, Vasco da Gama landed in Calicut in

    the West coast of India. His discovery of a direct route to India shifted the center of

    gravity from Europe to Asia and established for the first time India's direct contact with

    western world by an ocean route. The Cape route not only freed the merchants of Atlantic

    Europe from charges for the Suez Isthmus transit, but also enabled them to bypass the

    ancient link provided by the Arab traders in the Indian Ocean. The Portuguese defeated

    the Arab naval resistance and established their own ports of trade in India, South-East

    Asia, and at Macao in China. The Portugues