The Week in Review: Australia's Jones Act

The death of a foreign seafarer as he sailed into Australian waters last week has re-ignited debate about the role of foreign shipping in Australia.

ITF Australia coordinator Dean Summers was vocal in his frustration about the case. “All our information is being blocked,” said Summers, citing what he calls a “shroud of secrecy” that can hinder investigations on “flag of convenience” vessels.

Flags of convenience problems span more issues than this for Summers. Speaking in an interview published by the charity Human Rights at Sea, Summers says: “We’ve got to defend our environment. We’ve got to defend our national security, and we’ve got to defend our jobs as well.”

On the value of using Australian seafarers in Australian waters, he says: “Yes, they are more expensive, but it’s worthwhile. The army costs money; the navy and the air force cost money, so maybe the merchant marine should cost money. Maybe the merchant marine should also be considered part of the national security framework. They are going to have to be, because as soon as we get one explosion in a port, one possible terrorist incident, then we’ll be screaming: How come these ships are flagged in Monrovia and using exploited Burmese crew?

“Why don’t we treat our national shipping industry like the Americans, for example, with the Jones Act?” asks Summers. The ITF has asked the American administration to provide witnesses to come and talk to the Senate inquiry currently underway in Australia about how they treat seafarers as part of their national security program.

Summers says: “The Australian federal government is intent on abolishing any form of support for a national industry, so no encouragement for people to employ Australian seafarers; no encouragement for people to invest or trade on the Australian coast and the abolishment of cabotage by regulation. This is a dangerous thing.”

Labor Agreements

A flag of convenience is a way of registering a ship in a country that is prepared to prostitute its flag to get away from all sorts of regulatory costs, taxes, unions and other expenses, says Summers, who works to protect the rights of seafarers in Australian waters.

“My job is to coordinate the efforts of the union and others, including inspectors, to protect the rights of those seafarers. We’ve got three full-time inspectors in Australia, and around the world they join about 140 full-time inspectors.

“We try to encourage shipowners who go with the flags of convenience to have industrial agreements with us, and we are successful with about 40-50 percent of the world’s fleet. When they do, we have the authority and the right to police those agreements.”

One of the main agreements is a total crew cost agreement, which includes rights such as a minimum wage for seafarers and a maximum amount of time they can spend on board. The ITF polices the agreements and last year returned just under $60 million in wages to seafarers.

White Lists

Summers’ accusations about flags of convenience have been retorted by the International Chamber of Shipping (ICS) in its submission to the Australian Senate inquiry.

The ICS notes that, in his opening remarks to the IMO Marine Environment Protection Committee in May 2015, the IMO Secretary-General, Koji Sekimizu, remarked “We have moved beyond flags of convenience… they have become international registries with international responsibilities.”

According to statistics published by the United Nations Conference on Trade and Development (UNCTAD), the largest fleets (in gross tonnage) operating under what are generally accepted to be open registers are, in descending order of size: Panama, Liberia, Marshall Islands, Singapore, Bahamas, Malta, Cyprus and Isle of Man.

Collectively, 64 percent of the world merchant fleet is registered under these flags, all of which feature on the white lists of the two principal regional Port State Control authorities: the Tokyo MOU (which includes Australia) and the Paris MOU.

The ICS tackles many of Summers’ claims in its submission:

Minimum Employment Standards

ICS believes that foreign ships have no direct impact on Australia’s minimum employment law standards. Except in those trades where Australian requirements may also apply, foreign seafarers are subject to the employment law of their flag state and their country of residence, as well as the requirements of the ILO Maritime Labour Convention (MLC).

The MLC addresses a wide range of standards including: the obligations of shipping companies with respect to seafarers’ contractual arrangements; the responsibilities of recruitment agencies, working hours, health and safety, crew accommodation, catering standards and seafarers’ welfare. New measures have been agreed and will enter into force in 2017 to ensure that shipping companies have financial guarantees in place to guarantee that, in the unlikely event of abandonment, the crew will be repatriated and unpaid wages will be recovered.

The MLC also reinforces the ILO principle of freedom of association and the right of all seafarers to join a trade union of their choice. Another important protection under the MLC is the requirement for ships to have an independent complaints procedure, which must be fully instituted in order for a ship to achieve certification.

National Security

All foreign ships trading with Australia are subject to the requirements of the IMO International Ship and Port Facility Security (ISPS) Code, which is mandatory under the SOLAS Convention. All ships are also subject to national regulations introduced by Australian Customs, including advance cargo-screening rules.

Foreign seafarers hold Seafarers’ Identity Documents (SIDS) as required by applicable ILO Conventions. They are subject to Australian immigration rules, which for some nationalities necessitate visas in order to enjoy shore leave (contrary to practice in many other port states worldwide where applicable visa requirements are often waived for seafarers).

Marine Environment

With respect to the impact on the marine environment, says ICS, there have been dramatic improvements to the industry’s performance in recent decades. In the past 25 years, the average number of oil spills from tankers has halved. The latest figures since

2010 are the lowest yet with fewer than two spills (over 700 tonnes) per year worldwide.

The Jones Act

The ICS leaves aside one issue raised by Summers: that of Australian jobs. Here, the U.S. might add to the debate. For almost a century, presidents from both U.S. parties have supported the Jones Act including President Barack Obama, President George W. Bush, President Bill Clinton and President Ronald Reagan.

The Jones Act directly and indirectly employs over 500,000 workers and is responsible for $35 billion in GDP, $30 billion in labor compensation and $10 billion in taxes to federal, state and local governments.

Speaking at the 2015 Jones Act Shipping Forum in New York last month, U.S. Maritime Administrator Paul “Chip” Jaenichen affirmed the overwhelming support for the Jones Act in Congress, the Maritime Administration and the Obama Administration. “When everything is taken into consideration, the primary purpose of the Jones Act is to ensure a healthy domestic maritime sector for the Department of Defense to utilize in times of need, and it works. End of story,” said Jaenichen.

Australia’s Senate Inquiry has to report back by the first Senate sitting in 2016.