Chief Executive's Foreword
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1 Chief Executive’s Foreword For thousands of years the British Isles have exploited the sea to move trade. The small wooden rafts of our ancestors used to transport goods across rivers and narrow stretches of sea have now grown into mighty ships that can carry 20,000 containers or 2 million barrels of oil. Those who work in the industry will know that shipping moves 95% of the UK’s international trade. Those who do not might find it a surprise. Shipping fundamentally underpins our national economy and facilitates our place in a global economic community. So trading with our neighbours, friends and partners around the world is nothing new. It was not founded by the Treaty of Rome, and nor will it disappear if the UK is no longer subject to it. But for 40 years, when we have talked about trade, we have talked about the European Union. The movement of goods, people and services has driven the political project. We know that in the years ahead, as the referendum on our EU membership draws near, our national debate will become polarised and simplified into a matter of political allegiances and ideologies. It will at times become ill-tempered, as those who can see neither right nor wrong with the status quo take centre stage. But this debate is too important to be left to the politicians. As one of the UK’s largest industries, one at the forefront of moving our imports and exports, we have a responsibility to tell our story about our experiences in dealing with the European Union and with those that govern it. In this paper about shipping we ask: Is the single market functioning efficiently? Does the EU recognise the need for global regulation of shipping? Is the UK stronger as part of a collective negotiating and trade bloc? We look at the impact of the European Union on shipping where its engagement has been helpful, and where it has not. Our report finds that access to the single market has helped to drive growth in trade with our closest neighbours. The loss of tariffs and increased competition in the supply chain has boosted custom, driven down costs and allowed the conditions for job creation, economic and social progress to thrive. But even after all these years, barriers remain and the single market is not yet complete. The attitude of the European Commission appears to be ‘regulate where possible’ and not ‘regulate where necessary’ – an attitude that has created a sense of mission creep resulting in a centralisation of power in Brussels. This mission creep should be borne in mind - because the consequences of staying in an unreformed European Union are every bit as vital to this debate as the consequences of leaving. www.ukchamberofshipping.com 30 Park Street, SE1 9EQ 020 7417 2842 2 If, as the country that has persistently tried to keep its foot on the brakes of ‘ever closer union’, votes to stay in the EU without significant reforms, then the Commission could see it as a green light to finally put its foot down on the accelerator. This will likely result in more, not less regulation. For a global industry with global standards agreed through the UN’s International Maritime Organisation, measures which promote consistent and effective application of those standards are welcomed. But those measures which impose extra requirements on UK shipping beyond those global standards to its detriment are undesirable, and often undermine the international process.. This paper is not intended as a strategy document, but rather to support the necessarily broad discussions that are taking place about the role of the European Union. The Prime Minister’s renegotiations will soon be under way, and for him to win a deal suitable for the United Kingdom he needs a vocal industry to explain what needs to be done. Even the most pro-European of people argue the EU needs reform and with Euroscepticism rising across member states, the renegotiations provide an unprecedented opportunity not just for the Prime Minister, but for the whole of Europe. If, as many people believe, reform is necessary then the time for that is now and we must, and we will, play our part. Guy Platten CEO www.ukchamberofshipping.com 30 Park Street, SE1 9EQ 020 7417 2842 3 Executive summary The UK Government’s ongoing renegotiation of Britain’s position within the EU, ahead of an in/out referendum on EU membership, has provided an opportunity for the shipping industry to analyse the impacts that European policy and legislation have had on maritime trade and assist that renegotiation process. This paper is not intended as a strategy document, but rather to give the industry the opportunity to ask questions such as: is the single market functioning efficiently? Does the EU recognise the need for global regulation of shipping? Is the UK stronger as part of a collective negotiating and trade bloc for the benefit of shipping? For the UK shipping industry, access to the European single market has undoubtedly been the single greatest benefit of Britain’s EU membership. The removal of customs duties and tariffs at internal EU borders has improved supply chain efficiency and provided shipping companies with greater access to markets in all 28 Member States and the wider European Economic Area (EEA). Likewise, the single market has provided consumers with a wider range of product choice and created benefits for ferry and cruise line passengers. Over 50% of the UK’s international trade is conducted with other EU Member States and 40% of goods traded within the EU are moved by sea. However, the realities of the single market in operation can often be somewhat different to the theory behind it. While action has been taken to uphold the right of free movement of goods through the Treaty on the Functioning of the European Union, there are still areas in which the shipping industry would wish to see improvement. The removal of any remaining barriers to trade would help to realise the full potential of the single market. The industry would like to see the government reinforce the need for the Commission to focus on its role as a single market watchdog to ensure the EU market is functioning efficiently. Looking wider, UK shipping companies are also active in a global marketplace. Consistency in the application of rules to ships from all Flag States is essential and allows companies to compete on a level playing field. This consistency has been achieved over decades through the participation of Flag and Port States in international forums such as the IMO, the ILO, the OECD and UNCITRAL. Implementing international regulations nationally has resulted in global policy regimes in many areas of shipping, which often predates completion of the EU market. These range from safety on board ships and at ports, ship construction and design, pollution and seafarers’ working conditions and training, to liability and compensation regimes for marine pollution and third party incidents. Despite clear evidence that global regulation levels the playing field for an inherently international industry, the EU often takes a unilateral approach to maritime policy. As a consequence, the UK shipping industry has faced legislative proposals from the Commission which reflect little understanding of the industry and how it is regulated. It is recognised that the length of time it takes to draft and negotiate a convention, and then gain the requisite number of ratifications from States with sufficient tonnage on their registers, for it to enter into force can be substantial. It is unsurprising therefore that on some occasions, the EU wishes to press on with a subject where IMO has been slow to act. But we would stress that where the EU wishes to do so, it considers adopting the IMO approach in its entirety, and not add additional requirements without consultation with industry and strong justification. Measures which enhance the consistent application and operation of IMO conventions at EU level, rather than adding further regional obligations, have generally been seen as helpful to the shipping industry. Collective action by EU Member States, including counter piracy operations in the Indian Ocean, has demonstrated the value of co-operation on maritime issues and strength in numbers. There is clearly an ongoing need for the UK to work with other Member States on important external policy www.ukchamberofshipping.com 30 Park Street, SE1 9EQ 020 7417 2842 4 areas. The question is; during renegotiations, can the Government balance the need for collective EU action in some areas with the desire for increased autonomy in others? Shipping is a global industry, and like any other, it moves where the business takes it. If viewed as a single trading bloc, Europe is the world’s largest economy with extraordinary potential, but it is one whose economy is stagnating. A full scale review of existing EU regulations is necessary if Europe is to realise its full economic potential. The Commission’s processes should become less bureaucratic, and a ‘red tape challenge’ similar to the one undertaken by the UK Government could be undertaken to remove unnecessary, failed or outdated regulations. www.ukchamberofshipping.com 30 Park Street, SE1 9EQ 020 7417 2842 5 The single market and trade Key messages 1. Access to the single market has been of huge benefit to the UK shipping industry. Shipping operators and consumers have been provided with the opportunity to use efficient supply chains and greater choice, coupled with the abolition of restrictive import/export tariffs and other protective barriers to trade. 2. Remaining barriers to trade, such as customs reporting requirements for goods transported by sea, need to be removed in order to realise the full potential of the single market.