INTRODUCTION

The significance of adopting an appropriate shipping policy framework in sustaining and guiding this most significant of international industries has never been more obvious. Recent examples of policy conflict which have emerged in the disputes between the European Union (EU), International Maritime Organisation of the United Nations (IMO), industry representative bodies and various nation states over a variety of issues including tanker safety, taxation regimes, subsidy, vessel construction regulation and representation across jurisdictional regimes reveal the importance of there being a clear and widely accepted policy structure without which policies will be ineffectual, regulations ignored and the industry uncompetitive.

In the light of these concerns, this paper has a number of objectives:

1. to present a clear, concise explanation of the significance of jurisdiction in policy-making;
2. to define and assess the role of multi-level governance in shipping;
3. to outline the specific characteristics of shipping which impact upon the policy-making process at all jurisdictional levels;
4. to compare the jurisdictional characteristics of shipping policy-making with the characteristics of the industry and to see how successfully multi-level governance structures have been adopted by policy-makers;
5. to illustrate this discussion with recent shipping policy conflicts and the reaction of industrial players to assess whether a new framework for policy-making could improve the situation;
6. to provide conclusions to the ongoing policy debate and in particular whether a global policy-making body for the industry could reduce future conflicts.

The paper draws together themes from theoretical policy studies and governance, applying lessons from these disciplines to the practical context of the worldwide shipping industry. This may be an ambitious task in the limited space available but it is hoped that the major issues can at least be drawn out to prompt further debate.

POLICY AND SHIPPING

Policy for any organisation or activity is a concept that attracts many attempts at definition, but which remains difficult to grasp. Much like beauty, it is in the eye of the beholder, and as a consequence, due to the lack of a universal understanding, remains feared and confused. Before we can go on, it is necessary to agree some sort of definition of the framework of policy that can be applied to the shipping industry. Here we do not refer to its content or subject matter (safety, competition, environment, etc) that is far easier to agree, but to its fundamental structure and the mechanisms that characterise it. These need to be laid out in a way that can be applied to both vertical and horizontal policy dimensions – in other words across geographical definitions (largely spatially defined) and also across sectoral issues (ranging from economics to technical, legal and administrative issues among others).

Traditional policy sources commonly define the structure for policy-making and implementation as one dominated by jurisdictional considerations (eg Stone Sweet and Sandholz, 1997). Thus, for the shipping sector a structure as shown in Table 1 might apply.

Table 1 - Jurisdiction and policy in shipping.

Full table

Each layer of jurisdiction would be responsible for agreeing, implementing and enforcing policies relevant to their level for the shipping industry. Thus the international level, characterised among others by the United Nations (UN) IMO and the Organisation for Economic Cooperation and Development (OECD), sets the broad policy context for safety, the environment and security in shipping. These international strategies, agreed by the member countries of each institution, are implemented successively in more detail as we pass down the jurisdictional structure, the principle being that policy delivery at the most local possible level is always preferable as it will recognise the needs and constraints that exist more accurately. For example, the EU at supranational level, undertakes to enforce all IMO Regulations by passing broad Directives that require member state national governments to produce detailed legislation specific to their country (or even region/local) needs.

Conventional wisdom would stress that for policies to be coherent and workable, they need to derive from the highest level (albeit informed by lower levels) and drawn up in a broad, all-embracing fashion, which would become more precise and specific as they drifted down through the layers. This process, akin to subsidiarity in the EU, would ensure consistency across policy jurisdictions, based upon a broad awareness of the issues but with specific application increasingly directed towards issues relevant at a more detailed level. Feedback from each level back to the highest level would inform policy-makers of the need for initiatives and change. This type of policy structure is certainly not shipping specific and in theory at least could be applied to any sector.

While in theory this model of policy jurisdiction is appropriate, it clearly remains simplistic and although its application can be useful in understanding the emergence and principle relationships between policy bodies, a more flexible and dynamic approach is needed to match the characteristics and environment that characterises policy-making in all sectors (including shipping) in real life. The primary features of the jurisdictional model remain valid but need to be extended and developed.

It is not an objective of this paper to provide a history and discussion of policy models which can be applied to shipping over recent decades and the reader is advised to look elsewhere for discussion of such events (Aspinwall, 1995; Pallis, 2002). Suffice it to say that a full understanding of how policies emerge and the institutions which dominate policy-making in the shipping sector requires institutionalising flexibility in the approach to policies considered, the incorporation of policy institutions beyond those only government based to include industry, pressure groups and labour representatives, to allow for a cross-jurisdictional and non-hierarchical framework and to be capable of rapid change to changing contexts and priorities. The traditional jurisdictional model noted above, can achieve only some of this. Most recently, the emergence of new governance models has contributed to this discussion and in particular the role of multi-level governance as a structure to understand policy-making and enforcement in the shipping sector.

MULTI-LEVEL GOVERNANCE

Pallis (2006) provides a useful discussion of the importance of governance in understanding shipping policy, stressing the work of Bulmer (1994), Hix (1994, 1999) and Jachtenfuchs (2001) which relates to this issue. The role of multi-level governance and especially its significance to the EU situation, has been recognised since the beginning of the 1990s but has only really become of central interest since around 2001 (see eg Hooghe and Marks, 2001, 2003; Bache and Flinders, 2004; Szczerski, 2004; Hatzaras, 2005; Romanos, 2005; Stubbs, 2005). Polycentric governance represents the most recent manifestation of essentially the same concept (Scholte, 2004; McGinnis and Hanisch, 2005). Pallis (2006) notes that this far from excluded member states from the policy-making arena while at the same time taking account of the fact that EU policy crosses many conventional jurisdictional boundaries. Hooghe and Marks (2003) stress how it is a reflection of 'the allocation of authority upward, downward and sideways from central states'.

Multi-level governance has been defined as: 'a system of continuous negotiation among nested governments at several territorial tiers – "supranational, national, regional and local" that is distinctive of EU...policy' (Marks, 1993, p. 392).

Marks (1993) stresses that it is widely accepted that multi-level governance can be applied beyond this territorial definition to also include international/multi-national bodies and thus to go beyond its origins as applied to the EU. Pallis goes on to emphasise the significance of multi-level politics working hand in hand with multi-level governance represented by 'sectoral, socio-economic, national and sub-national interests' with shared policy objectives. Once again, this concept can be extended upwards to include international and supranational interests, and commonly also to include not only governments, but also private interests working in a 'fluid economic environment', operating in non-hierarchical, informal networks of actors (Pallis, 2006). Hatzaras (2005) sees the emergence of multi-level governance as a response to the recent debate in policy-making stimulated by the growth of the EU, focussing on the two schools of inter-governmentalism and neo-functionalism, the former focussing on the central role of states (Moravcsik, 1993) and the latter on the role of institutions – those of the EU (eg the Commission) in particular. Multi-level governance allows us to interpret policy-making flexibly, as a function of many actors including states and institutions and thus forms a potential bridge between these two contrasting theories.

By comparison, the conventional jurisdictional policy model is clearly limited in its ability to help us understand the processes of policy making and application in shipping although this does not mean that its lessons of coordination across boundaries and notions of subsidiarity are entirely irrelevant. Hence, the concept of multi-level governance in shipping has grown in acceptance as it appears to reflect the realities of the increasingly complex world of policy-making as the process of globalisation – and consequential decline of artificially defined jurisdictional spatial boundaries – continues to occur not least in shipping.

Hooghe and Marks (2003) emphasise that structures of multi-level governance remain ill-defined, in particular with reference to jurisdictional design and whether it should focus on issues/problems and/or communities and whether they should be infinitely flexible and/or limited in number. Hence, they accepted the idea of a jurisdictional hierarchy as we have noted earlier (conventionally international/supranational/national, etc) but it was debated whether these jurisdictions should change in number and character as the issue/problem changed, and then again as different communities were considered. Thus shipping safety for example, would require different jurisdictions from competition in shipping, with differing emphasis at different levels, would vary with community (seafarers, owners, insurers, etc), and would have to be characterised by differing levels of flexibility in terms of what was included and the priorities at each level. Inevitably the result is a much more complex one than that presented by the traditional jurisdictional model. However, it is prudent to remember that even this latter highly conservative model is seen by some communities and institutions within shipping as unacceptably radical, and they would rather see independent policy bodies commonly focussing on nation states alone, with only limited international or supranational influence.

To accommodate this new flexibility which multi-level governance offers, Hooghe and Marks suggest a framework of two Types – I and II (Table 2). Type I multi-level governance has limited and very well-defined territorial levels (conventionally those of international, supranational, etc) which 'bundle together multiple functions...policy responsibilities...a court system and representative institutions' (Hooghe and Marks, 2003). Membership boundaries do not intersect. Each jurisdiction communicates only with jurisdictions in the immediately adjacent hierarchy. At any territorial level there is only one jurisdiction, and this remains stable over a considerable period of time. This model clearly derives from the traditional jurisdictional model outlined earlier.

Table 2 - Types of multi-level governance.

Full table

Type II multi-level governance is notably different and attempts to take onboard the changes in policy-making that are occurring stimulated in part by the development of globalisation and the changing functions of member states.

Table 3 suggests some of the ways in which shipping fits more closely into Hooghe and Marks's Type II conception of multi-level governance within the EU. For example, the jurisdictional role of the Commission of the EU in shipping policy-making is primarily as the supranational body. However, its impacts are felt at international, national, regional and local levels, by government, industry and pressure groups at each of these levels. Meanwhile its policies are agreed primarily by member states' representatives at the European Parliament and Council of Ministers, and the significance of each jurisdiction in this complex structure varies with policy, timing and context. The role of the European Community Shipowners Association is almost as complex, as it represents member state shipowners, in supranational level policy-making, translating international policies (eg from the IMO) to member state level industries, in the context of pressure group activity and national and supranational politics.

Table 3 - Types of multi-level governance in shipping: examples from the European Union.

Full table

Shipping policy-making and the activity of policy actors would appear to be much more Type II than Type I. This is largely a consequence of the increased globalisation that characterises the shipping industry and to which the industry has had to adapt by becoming increasingly multi-jurisdictional and recognising the role of non-governmental organisations in the policy process.

Shipping is an intensely complex industry, much as a consequence of its inevitably high international activity. Shipping has always been involved in international markets and increasingly with globalisation finds itself with a variety of homes ranging through all the jurisdictions – from its home port, through its regional market, its adopted national flag, supranational authority responsible for safety and the environment and subject to international regulation through the IMO. There is no escape from internationally mixed crews, overseas insurers and freight forwarders, regulations at innumerable jurisdictions, bunkers from one country, cargoes from another, owners from elsewhere and brokers, agents and financiers from anywhere. Its inherent capital, labour and infrastructure mobility matches that of the EU's single market in creating a continuous free movement of assets between an infinite number of origins and destinations each seeking the lowest cost for the greatest gain.

This globalised complexity makes shipping ideally suited to analysis by multi-level governance and especially through a Type II framework. As we have seen already, Type II multi-level governance breathes flexibility, exists on the continually changing patterns of policy actors, industry ownership, investment frameworks, political influences and moveable assets and as such mirrors the characteristics of modern shipping. Table 4 gives some idea of the globalisation that has taken place in shipping and although far from comprehensive, the impression remains clear.

Table 4 - Globalisation, shipping and Type II multi-level governance.

Full table

The trends are exemplified in Table 4 and which encourage the application of multi-level governance to shipping policy have been given greater emphasis by what Lambert (1991) terms the 'escape of capital' which has undermined the role of the nation state in policy-making in all sectors but perhaps more so in shipping than elsewhere. Many of the trends noted in Table 4 can be traced back to this 'escape' that has facilitated the migration of policy responsibility across jurisdictions and between actors.

Thus, once domestically dominated shipbuilders and vessel finance sources, cargo acquisition, crew and officer sources, flag choice, insurance and legal representation, are now commonly derived from multiple and international locations, defined by capital and labour convenience rather than any concept of a home port/nation. The consequence is that the ease of capital exit (certainly capital fluidity) makes the concept of 'maritime' nation questionable as capital migrates with impunity. In turn this necessitates a new system of governance based on multiple levels, with the ability to be flexible across jurisdictions, sectors and activities. This is multi-level governance of the Type II character defined by Hooghe and Marks (2003).

Further emphasis driving interpretation of maritime policy-making towards this model has been given by the increased role of private capital in the maritime sector. New private owners of formerly (nation) state-owned assets in shipping and ports represent a new breed of policy actors, international in character and varied in style, constitution and ambition. Any governance model for the maritime sector must accommodate private, public-private and public actors of all degrees, commonly international in character.

Meanwhile Dicken (1994) further stresses the complexity of governance in shipping by viewing it as part of the production chain which exhibits a: 'spectrum of different forms of governance, that are best captured by the notion of network interrelationships structured by different degrees and forms of power and influence. Such networks invariably consist of a mix of intrafirm and interfirm structures.'

Multi-level governance principles of flexibility, cross-jurisdiction and public/private interrelationships clearly have much to offer in the understanding of shipping policy-making in this context.

Although it is not our main concern here, it is perhaps important to point out that despite the clear tendency towards a multi-level governance interpretation of shipping policy and the moves that have taken place away from strict and well-defined jurisdictional boundaries, the nation state has survived. Its death has been predicted by some for a number of years (Ohmae, 1995) and certainly questioned by others (Sletmo, 2001; Kovats, 2006) but there is no doubt that the nation as an institution remains both a reality and a policy-making influence. Evidence clearly comes from existing policy-making structures – nation state representatives make up the EU Council of Ministers and are elected by nationality for the European Parliament; IMO representatives are designated by nation as are those of the OECD and its transport specialist body the ECMT (European Council of Ministers of Transport). Nations still put into effect policies dictated from higher jurisdictions albeit this previously straightforward relationship is now made more complex by pressure groups, regionalism and variable jurisdictional interrelationships. Even pressure groups themselves are commonly made up of national representatives – ECSA (European Community Shipowners' Association); ESPO (European Seaports Organisation), etc. The nation state retains a policy-making and enforcement role in shipping quite clearly.

Dicken (1994) sees the nation state in shipping as taking on a new but important role in that: '...states take on some of the characteristics of firms as they strive to develop strategies to create competitive advantage (Guisinger, 1985). Both are, in effect, locked in competitive struggles to capture global market shares.'

Hirst and Thompson (1992) further emphasise that the demise of the nation state has not occurred and will not in the foreseeable future even in the shipping sector with all its characteristics of multi-level governance and trends towards ever-widening and deepening globalisation. Much of what they say applies directly to shipping and the nation state: 'The mechanisms of national economic regulation have changed but government policies to sustain national economic performance retain much of their relevance, even if their nature, level and function have changed.... While national governments may no longer be "sovereign" economic regulators in the traditional sense, they remain political communities with extensive powers to influence and sustain economic actors within their territories' (Hirst and Thompson, 1992).

Multi-level governance would appear to offer a framework for shipping policy that is appropriate and sufficiently flexible to accommodate the trends occurring within the sector. The significance of globalisation and internationalisation and the role of privatisation and production chains have all been noted as drivers moving policy analysis in shipping away from traditional jurisdictional models to multi-level governance models with characteristics of flexibility and cross-jurisdictional variability. However, the nation state retains a significant role in shipping policy-making as noted by Dicken (1994) and Hirst and Thompson (1992). This in turn creates some uncomfortable conflict within the sector to which we now turn.

THE PROBLEM FOR SHIPPING POLICY

Nation states remain central to shipping policy through their role (eg as representatives) at the IMO and within EU institutions and also through the part they play in policy implementation and enforcement. Meanwhile, the nature of the industry has changed in the light in particular of globalisation, so that models of multi-level governance that do not concentrate upon strict jurisdictional delineation are more appropriate. This mismatch of policy-making and enforcement authorities, contrasting with real-life sectoral shipping activity, causes problems within the sector of which there has been much evidence of late.

Perhaps most prominent in recent years has been the difficult relationship between the IMO and the EU as the latter has increasingly seen its role as one that should represent nation states at the UN organisation. Despite the clear resistance of member states (in particular, the dominant shipping nations of Greece and the UK), the EU has pressed on with trying to redefine its jurisdictional policy role so that its supranational status can provide the focus for national needs at an international organisation (see eg Lloyd's List, 2005a, 2005d). This complex argument is highly characteristic of a multi-level governance framework, with cross-jurisdictional boundary conflict dominating the proceedings through the resistance of both the IMO at international level (who see the nation state as fundamental to how they work) and the member states (attempting to preserve their role in shipping policy-making). Little has been resolved as yet but it seems likely to be a battle that will continue to rage as globalisation suggests the need for less focus on national priorities and rather more on international and global policy initiatives.

Further evidence of complexity in policy-making and implementation in shipping comes from recent reports of conflict between the IMO and what was termed 'unilateralists' from member states who are concerned (along with the EU) with the speed at which the IMO works in response to major policy failures (including eg the Estonia, Braer and Erika ship casualties) (Tradewinds, 2006). This is far from a new trend however. The USA took unilateral action with the implementation of the Oil Pollution Act in 1990, and its impact upon single-hulled tankers. Only now is the IMO beginning to catch up and lags behind action subsequent to the Erika incident taken by France without recourse to the IMO or the EU. Multi-level governance models are once more strikingly appropriate compared with the neat but increasingly irrelevant traditional concept of distinct jurisdictions designing, implementing and enforcing shipping policies through an agreed hierarchical framework.

Further evidence of governance problems in shipping policy have come thick and fast in recent years suggesting the need perhaps for new structures of decision-making and implementation which better reflect the real-life relationships between jurisdictions and policy actors that exist. Reports in Lloyd's List for November 7th, 2005 suggested that the USA deliberately avoided EU institutions in attempting to influence EU policy about container security and the Galileo satellite navigation proposals and dealt directly with the member states. The US Ambassador to the EU at the time is quoted as saying: 'We handle our bilateral relationships with the EU member states largely without regard to the multilateral organisation that increasingly determines those very countries' laws and policies' (Lloyd's List, 2005b).

Many and long are the debates over member states' rights and opinions, EU priorities and the relationship with the shipping industry which have focussed, along with the role of the EU institutions at the IMO, upon suggestions that an EU flag would replace all member states flags, criminalisation of seafarers and common rules of vessel structures and pollution from ships among many others. Complex governance issues have been raised frequently. Thus for example, representatives from the Royal Association of Netherlands Shipowners publicly questioned the European Commission's attempts to replace member states at the IMO and more broadly interference in the Netherlands national shipping policy (Lloyd's List, 2005c). Despite denials from the Commission, suggestions that an EU flag could replace national flags in the Erika 3 package raised a storm of debate in member states (Lloyd's List, 2006a) while rumours abounded that the EU was poised to intervene in the ports sector again despite widespread condemnation from the ports industry and most member states (Lloyd's List, 2006b, 2006d). This discussion included industry representative bodies (eg ESPO); the owners of individual ports (DP World, Hutchison, PSA, Eurogate, HHLA, etc) whose jurisdiction is variable, extensive and crosses traditional boundaries; the EU institutions (Commission, Parliament, etc); member states; regional authorities; pressure groups (Greenpeace, Friends of the Earth, etc); and labour movements; and even brought comment from overseas governments (USA) and shipping companies. This suggested the need and possibly even desire for a multi-level governance framework. Meanwhile, the issue of criminialisation of seafarers involved in accidents and pollution incidents has raised many governance issues as well, emphasised by the Secretary of the IMO Efthimios Mitropoulos who in speaking at BIMCO stressed: 'There is also what I consider a misguided trend towards seeking political solutions to shipping-related matters without even bringing them to the international body that was specifically set up to deal with them. All of you here will be familiar with issues such as the criminalisation of seafarers who become inadvertently caught up in accidents and pollution incidents, and what ended up as a clumsy, three-tiered approach to the phasing out of single-hull oil tankers' (Lloyd's List, 2005e).

Disagreement and confusion over policy and its jurisdiction continues through 2006 to the present time. The UK government has objected to the proposed expanded role of the EUs EMSA (European Maritime Safety Agency) to take away more power from national agencies proposed in a new Green Paper on shipping policy which raised issues both of policy content and governance. Meanwhile, member states Cyprus and Greece were combining forces to combat new structural rules for tankers and bulkers imposed by the International Association of Classification Societies (IACS) which would be automatically enforced by the EU, a dispute involving international, supranational and national governments, industry representative bodies (in conflict with each other), labour organisations and pressure groups (Lloyd's List, 2006e, 2006f).

It is sufficiently clear that there are policy differences within shipping that cross all jurisdictions and issues. It is equally clear that the failure is not with the principles of improving safety, the environment, security and competition within the market place but in the framework for policy generation and agreement and the mechanisms for policy coordination and enforcement. This failure can be traced back to the mismatch that exists between the existing policy framework – built largely upon traditional hierarchical structures of jurisdiction – and the methods by which shipping policy actually emerges and needs to be structured and enforced – which mirrors the characteristics of Hooghe and Marks (2003) Type II multi-level governance model. This mismatch means that policies derived with all good intentions at higher level jurisdictions fail to be transferred down the jurisdictional hierarchy effectively as this mechanism ignores the complex range of policy interrelationships that we have seen exist in the shipping industry. These encompass all jurisdictions interacting with each other, without necessary respect for intervening jurisdictions within the hierarchy; policy players from government to pressure groups, industry representatives to labour; with policies emerging at all levels – local to international – and each of these varying with policy, sector, issue and actor. This multi-level governance potpourri requires a multi-level governance structure and understanding if it is to be effective and if the substantial policy disputes that have characterised the industry for some years are to be avoided. The current traditional arrangement cannot do this.

CONCLUSIONS (OR IN THE WORDS OF LENIN 'WHAT IS TO BE DONE?')

Lenin was faced with a multitude of policy problems in 1901 when he wrote 'What Is To Be Done?' focussing in particular on what should happen next to further the Social Revolutionary movement (Lenin, 1901). Clearly, shipping policy faces a crisis that may not have the same impact as that of the rise of Bolshevism in Russia but which does have the potential for disaster. Shipping policy is all about substantive issues such as life and death, injury, pollution, terrorism, jobs and prosperity and is not a creation for pleasure alone. Hence, it needs to be well debated, efficiently organised, implemented and effectively enforced. It is suggested that it is none of these things at the moment evidenced by the catalogue of disputes, unilateral actions and market failures that abound. A new policy framework is needed which although never eliminating these problems, would create a more effectual policy mechanism. This new framework needs to take account of the clear multi-level governance nature of shipping in an increasingly globalised and international world. As such it must:

• take regard of jurisdictional constraints but not be entirely constrained by them. It must allow policy to emerge from all jurisdictional levels and to be transferred to other jurisdictions without necessarily passing through all hierarchies;
• be characterised by flexibility in its application of policy measures to governments, companies, pressure groups and individuals depending on time, context and issue;
• allow jurisdictional definitions to change with circumstances and to permit policies to flow from multi-facetted organisations which might be characterised by all or any of the actors affected, not just governments advised by narrowly defined interested parties;
• facilitate the redefinition of jurisdictions so that some might disappear, some gain strength and others be created that cross conventional boundaries. Shipping is artificially constrained by current jurisdictional definitions that are commonly a consequence of historical accident.

Hatzaras (2005), borrowing from Borzel and Risse (2003) and Featherstone (2001) sees this as a process of complex causality: '...references to structure and agency appear in differentiated and often related facets within European multi-level governance. EU membership rights obligations can have far reaching domestic ripple effects in terms of their domestic impact. Agency has been reported as not merely unidirectional or 'top-down' but rather manifesting in evolving patterns and feedback loop circuits.'

Radaelli (2003) suggests concepts such as construction, diffusion, institutionalisation of formal and informal rules, procedures, policy paradigms, styles, 'ways of doing things', and shared beliefs and norms, as examples of the process of policy agreement and implementation – far from the formalised structure inherent in shipping policy and its derivation through nested hierarchies.

Consequently, a policy-making structure more akin to Type II multi-level governance and poly-centricity is needed to provide a framework for the globalised shipping industry. Kovats (2006) provides one way out – seeing flag states as 'relics' and suggesting that an international regime to ensure seaworthiness, environmental protection and economic competition would be more appropriate. In turn, this could incorporate a more flexible approach to policy-making that could (significantly) incorporate variable levels of jurisdiction, institution and location as and when most fit. However, it remains highly questionable whether nations are in the slightest prepared to hand over policy responsibilities to such an authority regardless of the benefits in the wider sense. National (regional and local) political priorities are more likely to make such a suggestion unacceptable, if in part because it might actually work.

Shipping needs policies that are appropriate for a globalised industry working across all jurisdictions in a complex environment. Multi-level governance provides a structure that could be developed so that policy-making for the sector became characterised by less conflict and abuse and increasing effectiveness as a result.

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