Chief Obosu Mohammed: The cabotage regime; Courses for Ghana?
The dictionary of black law defines cabotage as cabotage which refers to trade and commerce along the coast. It simply refers to the transport of goods and people in coastal waters between two points or ports within a country.
This definition has been expanded to include inland waters such as rivers and lakes. Cabotage in its truest form can be characterized as discriminatory because it enforces the right to trade or navigate coastal and inland waters only by national carriers.
The essence of the cabotage regime is to improve local economic activity, public interest and security, national employment, fleet expansion, eradicate competition with foreign companies and strengthen the integrity of national security.
The essential clause which is incorporated into most cabotage laws or policies which is a derivative of the Merchant Marine Act, 1920 (USA) which is also known as the “Jones Act” is the requirement that ships must be built, owned, registered and operated exclusively by the natives who must engage in internal trade and navigation in the coastal and inland waters of a country.
Ghana, at present, does not have a cabotage law to regulate its nascent national maritime or maritime industry. It is instructive to note that foreign vessels bring various types of cargoes from other countries to our ports on a daily basis and leave – this is essentially not the target of cabotage regulations.
There is currently a national (cabotage) bill of 2017 which is being tabled in parliament for adoption. The National Trafficking (Cabotage) Bill 2017 focuses on a protectionist regime that seeks to entirely restrict foreign participation in its domestic trade and navigation.
Our Coasting Trade Bill, if passed in its current form, will be based on the American model which places the construction, possession, crew and registration of ships in the hands of Ghanaians alone.
While this may be theoretically plausible in light of the promotion and protection of local content, Indigenous businesses, and by extension our national security interest, the practicality of its implementation will be an obstacle. major and a setback if not carefully considered by political and industrial actors. – we must examine the depth of the sea before we dive into it.
It is also important that we recognize the fact that laws can remain buried if they remain operationally and practically ineffective.
The protectionist cabotage regime if enacted in Ghana will create fundamental technical and capacity constraints. Should we satisfy ourselves by answering some important questions to arrive at a workable position?
Do we have the capacity to build lower cost vessels that can meet our local requirements and international safety standards and other protocols? Do we have the skill level and the number of seafarers required? Do our nationals have the financial capacity and the interest to invest in the possession of vessels that can meet our local demand?
How to deal with the issues of Foreign Direct Investments (FDI) and Globalization? What happens to international oil companies engaged in oil production that operate all types of vessels in our territorial waters? What are the implications for national security if we apply a liberalized or relaxed cabotage regime? More importantly, how have countries like the United States which apply the strict or protectionist model of cabotage behave in their national maritime activities?
In the case of the United States, the obvious restrictions on internal trade have had multiple consequences on their economy – the lack of competition, especially between national and international players, continues to support their prices for domestic consumers – there is also a drop in their domestic shipments.
The Organization for Economic Co-operation and Development (OECD) says it costs four (4) to five (5) times more to build a large merchant ship in the United States than in Asia, for example. Moreover, according to the United Nations Conference on Trade and Development (UNCTAD), this explains why about 91% of the large merchant ships built worldwide come from countries like China, Japan and Korea – most of these Asian countries. countries apply a liberalized or relaxed cabotage law.
In saying this, the United States is prepared to sacrifice its economic gains from its cabotage laws for its national security interests due to the constant threat of terrorism – their national security implications are of one primary interest for them and, therefore, are not ready to relax their guard by protecting their territorial waters against any external aggression.
Therefore, a country like Ghana must weigh its options and understand what is at stake – As long as we want to protect the integrity and sovereignty of our territorial waters against any form of insurgency, are we really threatened with terrorism or aggression such as can we want to place our territorial waters in the hands of our only natives to the detriment of our economic growth by allowing competition through controlled foreign participation?
The Nigerian government has put in place a 2003 Coastal and Inland Navigation (Cabotage) Act that regulates its national shipping industry.
They also face major operational and technical challenges in implementing their Coasting Trade Law with a view to the construction, ownership, operation and registration of vessels by Nigerians fully. in Sections 3 to 8 of their 2003 Cabotage and Cabotage Act. .
However, the Coastal and Inland Navigation (Cabotage) Act 2003, in its sections 9 to 14, sought to remedy the harms that the protectionist or strict cabotage regime will create by giving a small window to foreign participation, in particular in areas where Nigerians lack technical capacity and skills. know-how by granting exemptions and restricted licenses to foreign vessels.
The Coastal and Inland Navigation (Cabotage) Act 2003, in accordance with Articles 42 to 45, also provides that financial assistants to Nigerian operators may acquire vessels through the Coasting Vessel Finance Fund (CVFF).
However, this is not to say that Nigeria’s 2003 Coastal and Inland Shipping (Cabotage) Act does not have its own operational challenges. For example, it has become more costly for the Nigerian government to put in place an effective monitoring and enforcement system for its coastal and inland waters due to logistical constraints and the cost of these tools in accordance with the 2003 Law on cabotage and cabotage.
In addition, the lack of political will and determination to implement the 2003 law on coastal and inland navigation (cabotage) to the latter adds to the acts of pirates and attacks by militias operating in their territorial waters, especially in areas of oil production.
As I indicated earlier, countries such as Korea, Japan, China including Brazil, Australia, New Zeal, etc. have a liberalized and relaxed regime to some extent that allows some level of foreign participation in the trade and navigation of its coastal and inland waters. waters.
For example, China reformed its cabotage law in 2003 to allow shipping companies that have signed bilateral agreements with them to ship empty containers between ports along its coastal lines. The Korean government has also abolished transshipment fees and relaxed its cabotage laws to make their ports highly attractive, attract competition and boost their economic activity as a northern hub for Asian container traffic.
In New Zealand, the Coasting Trade Act limited coastal trade and navigation to native vessels, unless there were no New Zealand flag vessels the law allows foreign vessels to participate before obtaining a permit from the Ministry of Transport.
Ghana needs to learn lessons and strategic considerations by adopting a cabotage regime that is progressive, practical and with some degree of liberalization. This can be achieved keeping in mind that we are limited in terms of funding, technology and skills in the ownership, crew, construction and repair of merchant vessels.
Allowing a certain level of window for foreign participation is realistic and practical in the sense that it will promote competition and economic activity which can lead to direct investment and job creation for our people. Going down the path of a strict or protectionist cabotage regime will only stifle the growth we all envision for our national maritime and maritime industry.
It is clear from the above that even developed economies like the United States that practice strict and protectionist cabotage regimes are struggling to stay afloat. We need to learn from some of these shortcomings, including the problems associated with the Coasting Trade and Coasting Trade Act 2003 (Nigeria) and come up with practical solutions through wider dialogue and consultation with all. industry players and experts.
Chief Obosu Mohammed
[International Maritime Consultant]
Asare Barimah & Associates