They have been called “Ships of Shame” and “Runaway Flags.” They are substandard vessels crewed by exploited, often inadequately trained mariners. In most cases, there is little connection between the owners of these ships and the countries under whose flags their vessels fly.
These floating sweatshops are the building blocks of the notorious “Flag-of-Convenience” (FOC) system. It exists for one reason and one reason only: to allow companies to avoid paying taxes and escape the minimum health, safety and environmental standards of their home countries.
The FOC system became embedded in the international community after World War II, when Congress enacted the Ship Sales Act of 1946, which authorized the sale of American vessels overseas at cut-rate prices. The situation was exacerbated a year later when the government offered War Risk Insurance to American companies that had reflagged their vessels under registries deemed to be under “the Effective Control of the U.S.”
The rise of the FOC system has threatened traditional maritime registries. As a result, conditions in the international community have worsened. In response, the MTD and its affiliates have given strong support to the worldwide FOC Campaign run by the International Transport Workers’ Federation (ITF), a London-based association of more than 600 transport unions.
With more than 100 inspectors located in ports around the world, the ITF and its affiliates have established policies that form the basis of an ITF Standard Collective Agreement. In ports all across the world, they have contacted federal and local officials to deal with unpaid wages, unsafe conditions and foreign mariners who have been left stranded.
The ITF defines an FOC vessel as being one that flies the flag of a country other than the country of ownership. There is no “genuine link.”
FOC registries are characterized by cheap registration fees, low or no taxes and the freedom to employ cheap labor. There is little transparency, which means that the true owners of a vessel are hard to track down. Not only does this hinder the enforcement of U.S. or international environmental laws in cases where there have been oil spills or other accidents, it also gives unsavory people and groups a means to launder money.
In the United States, there are federal and state maritime schools and jointly run labor/management facilities to ensure the availability of the highest skilled labor. In the FOC system, crews are supplied by hiring agents who can blackball a person for making any kind of protest against shipboard conditions, even those that threaten the lives or safety of the crew. Training standards aboard these vessels often are non-existent.
Pointing to the rise of globalization, the ITF recently noted, “Each new FOC is forced to promote itself by offering the lowest possible fees and the minimum of regulation. In the same way, ship owners are forced to look for the cheapest and least regulated ways of running their vessels in order to compete.”
As part of its FOC campaign, the ITF is requesting:
- The elimination of the FOC system and the establishment of a regulatory framework for the shipping industry;
- That individuals and organizations concerned with improving conditions in the international maritime community attack substandard shipping and seek ITF acceptable standards on all ships irrespective of flag; and
- Legislators and policymakers around the world work to protect and enhance the conditions in the international maritime industry and to ensure that all workers are protected from exploitation by their employers and those acting on their behalf.