News

Portuguese flag – low port dues in China – fair competition

17/01/2019

Increasingly the maritime world is moving onshore from offshore. This momentum cannot be halted. The reasons for this are manifold. They can be found mostly in the realms of politics, trade and finance where the industrialised world is showing more and more interest in marketing “its” jurisdictions, with the intention of creating advantages for its own enterprises and companies.

Where they hoist their flags, countries can regulate. Therefore, it is no surprise that members of the European Union, China and other countries or institutions have recognised the importance of the flag their vessels fly.

Countries constantly try to improve trading conditions for their industries. One example is Chinese port dues, known as “tonnage dues”. Since 2012, China has very clearly differentiated between “ordinary tonnage dues” and “preferred tonnage dues” – the latter being substantially lower. 

Those qualified for the attractive “preferred tonnage dues” are all ships under flags whose countries have a trade agreement with China and operate within the “most favoured nation” clause. The list is long: more than 80 countries enjoy this privilege, including the entire European Union. Vessels operating under the German, Portuguese, French and even Luxemburg flags benefit from this competitive advantage.

However, among those not included are Panama, Antigua and Barbuda and the Marshall Islands. In addition, it is one of the many trade agreements that will no longer apply to the UK and Gibraltar after Brexit in March 2019. This is why we still believe that Brexit may not happen. 

The reputable flag of Liberia managed to acquire similar privileges for vessels operating under its flag in 2016. The agreement with China was a great accomplishment, given the limited global importance of Liberia compared to the EU. The agreement between China and Liberia was set for three years and has now been prolonged for another three years. It carries an expiry date, unlike the EU-China agreement which has no limit and therefore guarantees the low port dues for the long term. 

Nonetheless, Liberia’s flag advertises its advantages globally as a unique selling point and we believe the time is right to address this. We do not understand why a quality provider and leading player such as Liberia needs to distort facts. Liberia shares a real competitive advantage with 80 other countries, including all EU countries. An expiry date is an expiry date and therefore a competitive disadvantage.