FLAGS OF CONVENIENCE: THE DEVELOPMENT OF OPEN REGISTRIES IN THE GLOBAL MARITIME BUSINESS AND IMPLICATIONS FOR MODERN SEAFARERS

Abstract

Flags of convenience, a tool developed by the modern maritime business to circumvent Western labor and tax regulations through international vessel registration, pose a significant risk to the well-being of global seafarer labor and contribute to the decline in prominence of American Merchant Mariners. When an American-owned vessel is outsourced via a flag of convenience, the owner is no longer required to follow American labor laws or pay American taxes, and this motivation is one of the most frequent reasons for the action. Often ignored by business leaders seeking to lower their operating costs, the seafarer suffers the most under a legal system chosen by his employer when he or she registers the vessel. While little attention is paid to this situation by the popular global labor movements, the issue touches all consumers, as we are end users of shipping every time we purchase a foreign-sourced item in a store.

As we will see, globalization itself was made by possible by open registry shipping, and open registry shipping was a self-inflicted wound on the industry. Flag of convenience shipping encouraged and enabled low-cost international sourcing of labor and manufactured goods by making it easy to swiftly lower transportation costs. An industry-wide motivation to keep shipping freight rates as low as possible led to a complete disregard for all other concerns. Developed alongside the shipping container, we will see that the impact to labor was severe. Flags of convenience produce a shipboard environment free from guaranteed rights to bargain collectively or strike, and often have strained working conditions. These ethical considerations, along with all other aspects of the decision to outsource, will be explored in great depth in subsequent chapters. We will see first the perspective of the owner and the financial and operational motivations to flag out, followed by a detailed analysis of the implications for the seafarer. Concluding statements will discuss the impact on American labor in the future and possible opportunities for further action.