December 12, 2013
Are the Rumors True?Maritime TV Presses Clay Maitland about Second Registry and the Real Purpose of MMPC
BY MAREX
There have been various rumors in some maritime industry circles that plans for a second U.S. ship registry akin to some European flag state models are being considered in Washington.
There has also been speculation that International Registries, Inc., the registry and offshore corporation administration for the Marshall Islands, and its Managing Partner, Clay Maitland, would be involved with this second registry, possibly related to the activities of the Merchant Marine Policy Coalition, (MMPC) which he co-founded.
Maritime TV decided to put Mr. Maitland on the spot and see if he would respond to questions on this during an interview on December 10.
Somebody explain, brass tax only, what all this means, because the real consequences of it have only barely been touched upon. Is it that they are going to sanction another nation (like the Marshall Islands or Liberia) to be a valid ship registry under the Jones Act while keeping it’s other caveats in place? If that is the case I say this solves nothing and is a huge waste of time and money.
To counter the trend of the reduction of the national fleet some European countries have established international registries. International registries are second national registries allowing
ships to fly the flag of that state. They are still subject to strict rules concerning ownership,management, manning and operation but these rules are not as strict as the original registry.
The national registry often becomes of less regulatory importance and the standards of the International registry become main. The Danish international registry has 92% of the total
tonnage of the national fleet, the German International registry has 76% of its fleet, and Finland has 50% if its fleet.
With the aim of preventing existing registered vessels on the original register from having to reregister in an open registry and attract back those who flagged out, manning costs, for example,
are reduced to a competitive level. Shipowners are permitted to employ foreign crews on local collective agreements. The foreign crews are then relieved of requirements to pay income tax
and social security contributions.
The Danish and Finnish international shipping registries are open to shipping owned by their nationals or by foreigners providing their citizens have a major influence over the ships’ activities
and operation, bareboat registrations for example32. The labour laws of Denmark and Finland solely apply under their respective registries but the ship owner is permitted to employ foreign
crews from the Far East on Far East collective agreements. The German International register on the other hand requires that a proportion of the crew must be EC citizens, thereby making the
possibility of employing Far Eastern crews harder. It does however permit the shipowner to negotiate conditions of work that are governed by the law of the country of domicile. This is
perceived as a major advantage to the ship operator as long as the collective agreements agreed do not violate ILO regulations for which Germany is signatory.
All crew members, national and foreign, and domicile in Denmark or Finland respectively are relieved of obligations to pay income taxes or social security contributions. The crews of
German and Norwegian registered ships are not exempt form payments. Shipowners registered on the Danish international register are relieved of having to pay on behalf of all their crew
income tax and social security contributions. Finnish shipowners are not excused of such payments but are refunded the payments later. Shipowners whose ships are registered on the
German International register are not entitled to relief. Norwegian shipowners, on the other hand, receive 19% of the cost of crewing a full Norwegian safety crew direct from the
government.
Seafarers on board vessels registered in both the Danish and Finnish international registries are entitled to social security benefits and income tax benefits as if they had paid them. Indirectly
this is a form of state aid in subsidising seafarers on board vessels in the international register and exempting them from charges arising out of the tax system. Seafarers on board vessels
registered on the German International Register are entitled to social security and income tax benefits as prescribed by German Public Law.
The pointy end of the tack, the bit that pokes us in the ass, is that political contributors to the lawmakers who permit this have huge financial incentives to replace you with cheap labor. They can then complain that you are a drain on the economy because you are greedy and want to collect unemployment so you can feed your family and pay your mortgage. They will be happy when you are so desperate you will beg for an opportunity to undercut wages of the foreign labor that replaced you. By then they will have repossessed and resold your real estate and will need to build more ships in Bumfukostan to carry the growing cargoes of cheap junk that is all you can afford anymore.