inforMARE - FORUM dello shipping e della logistica

ANNUAL REPORT
2006-2007
TABLE OF CONTENTS

ANNEX 3

SHIPPING IN ECSA MEMBER COUNTRIES


BELGIUM

At the annual general meeting of the Royal Belgian Shipowners' Association Nicolas Saverys was pleased to announce that 2006 was another vintage year for global shipping in general and for Belgian shipping in particular. The fleet has nearly doubled in the last two years, the shipowners create (European) employment and added value, Belgium is on the white list, the delay in the ratification of international treaties is nearly resolved, the Maritime Academy is thriving and there are a few nice projects in the pipeline; in short Belgian shipping policy is a success.

In 2006 Belgium rose for the 2nd time in the rankings and this time by 4 places. It is now 17th in the world ranking with 203 seagoing ships (merchant, dredgers and seagoing tugs) with a total tonnage of 11.559 million dwt. In 2003, just before the flagging-in, the total tonnage was 6.176 million dwt and Belgium was ranked 24th. On top, 94% of the Belgian fleet sails under national - mainly European - flags. Only a small part of the Belgian controlled fleet is registered in an open register, namely 0,7 million dwt (6.1%). 51% of the Belgian fleet flies the Belgian flag.

More importantly, Belgium conforms in full to the European maritime policy that encourages the flagging-in in national registers as a means of achieving more transparency in the ownership; it also makes European Member States responsible again for the labour conditions and employment on board ships, as well as for the technical quality of the shipping and inherent in that the protection
of the marine environment. The Belgian government itself is responsible for checking its fleet. In the course of 2006 very important working agreements were made with the classification societies to this end. Currently, Belgium only recognizes classification societies who are a member of IACS.

A Commission for the Revision of the Maritime Law was set up which has to embrace the revision of the public maritime legislation (immunity of state ships, registration of sea ships, regulations concerning ship measurement and security, shipping inspection regulations, disciplinary and punishment statute book, maritime shipping regulations etc.)

On Belgian flag vessels all EU residents are registered in the Belgian merchant navy Pool and subject of Belgian pay and working conditions. In the last quarter of 2006 the number of seafarers registered in this Pool increased with 9,27% compared to the 1.1.2004.At the end of 2006 512 students were registered at the Maritime Academy. This is twice the number registered in the 2000/2001 academic year.

Just like all other sectors, the maritime sector in Belgium has to deal with the problem of an ageing workforce. Very soon there will be a huge number of merchant shipping officers reaching retirement age. It is of paramount importance that provision is made to replace these people.

That's why the maritime sector does everything in its power to spread the news to young people about the advantages of a maritime career. In 2006-2007 :

the website www.areyouwaterproof.be was updated
adverts were placed in several young people's magazines (135.000 leaflets, 5.000 posters)
presence at various fairs
a promo team visited several events where young people were present (promo car)
an interactive educational computer animation on cd was produced (2.000 copies) and distributed free of charge.




BULGARIA

The Bulgarian Shipowners Association (BSA) was established in December 2003. The composition of members' fleet include container vessels, bulk carriers, general cargo/multipurpose, Ro-Ro (including rail ferries, but no Ro-Ro passengers), chemical tankers, product tankers, miscellaneous vessels (tugs, training sail vessel, oil recovery/ cleaning vessels, supply vessels, etc.).

The main task of the association as an NGO of shipowners/shipmanagers is to consolidate its members position on substantial issues related to national and international developments in shipping; also, to promote their position through public-private partnership in the process of change in national legislation and practice after Bulgaria's accession to the EU. The association is also looked at as a forum of the emerging Bulgarian private employers - shipowners and their representative - in the tripartite social dialogue.

As of August 2005, BSA took over from the state shipping company Navibulgar the membership of Bulgaria in ICS and ISF, thus recognizing the association as a legitimate representative of all Bulgarian shipowners. It was this capacity of BSA, which permitted a representative of BSA to participate in the adoption of the MLC 2006 in February 2006 in Geneva as a delegate of the employer's quota in the Bulgarian tripartite delegation.

The BSA was co-organiser of the first European tripartite seminar on the promotion of the MLC in September 2006 in Varna. The Seminar was the first event of this kind, which took place after the 94th session of the International Labour Organization.

The goal of the meeting was to achieve a global and effective application of an international instrument, covering all norms and standards in the field of the maritime labour law. High-representatives of ILO, EC, EMSA, ISF, ITF, as well as representatives of twelve EU Member States took part in the forum. Special attention is now paid to the GAP analysis and preparation of legislative package to support the ratification of the MLC by Bulgaria, and BSA is officially involved in the process. In March 2007 we participated in the social dialogue meeting between ECSA and ETF in Brussels on the implementation of MLC.

The BSA is trying through the tripartite social dialogue on the national level, and specially at the Ministry of Transport, to persuade the government to introduce number of measures from the EU Guidelines on State Aid in Maritime Transport; the practice in a number of EU Member States shows that this would be the most efficient way of promulgating and strengthening the development of shipping activities in Bulgaria, including increasing the quality of the national flag. Although a tonnage tax system was introduced two years ago in Bulgaria, it is not used by the private shipowners, and other measures are necessary aimed at reducing the labour costs and permitting the use of foreign citizens on board Bulgarian flag vessels, which is currently forbidden by the law.

As a general statement, the fiscal framework and administrative practices currently are not attractive enough for a private shipowner/manager to base its commercial and strategic management in Bulgaria.

We look at our new membership in ECSA as a positive development and a chance to exchange know-how and to cooperate with other members in achieving growth and sustainability in maritime transport developments.



CYPRUS

Cyprus constitutes the 3rd largest shipping fleet in the EU, and is considered to be the largest third-party shipmanagement centre in Europe.The contribution of Shipping to the Economy of Cyprus is calculated at 4% of the Gross Domestic Product. Latest national statistical figures indicate that income from the Maritime Transport Sector in 2006 reached approximately 1 billion Euros. Another important contribution of the Cyprus Shipping Industry is that it has created many employment opportunities for Cypriots. The total number of gainfully employed persons by Cyprus shipping ashore is approximately 4,000 and 25,000 seafarers are employed onboard Cyprus flag ships at any one time.

The main efforts of Cyprus are presently focused on the continuous improvement of the existing infrastructure, the incentives available to both residents and non-residents and the enhancement of the international reputation of the Cyprus flag as a maritime flag.

Special emphasis is given to further improving the speed and efficiency with which the Cyprus Department of Merchant Shipping is providing services.Towards that end, the Department utilises the latest computer and telecommunications technology.The hours of work of the Department have been extended and urgent matters may be dealt with after office hours. Overseas offices both in Europe and in the U.S.A. can also offer their services whenever they are requested.

Additionally the network of inspectors of Cyprus ships has been further improved with the organisation of a training course for all inspectors in Cyprus, with EU funding. During the last few years, Cyprus adopted a series of measures aiming at the upgrading and the modernisation of Cyprus Shipping through a safety policy which focused on the effective control of the ships and the improvement of the quality of its fleet. Particular attention was also given to the qualifications of the seafarers employed on Cyprus ships as well as to their conditions of living and working.

This policy and the relevant measures proved to be successful and the objective of moving to the White List of the Paris Memorandum of Understanding on Port State Control was achieved in May 2006.

During October 2006, Cyprus participated voluntarily in an Audit Scheme undertaken by the IMO. The completion of the Audit revealed that the Department of Merchant Shipping has substantially complied with the IMO Assembly principles established under A. 974(24) and with the Code for the implementation of the mandatory IMO instruments A.973 (24). The respective scheme portrays the Cyprus image as the only open registry having achieved this and as the second country worldwide being voluntarily audited. The Department of Merchant Shipping already has in place a complete system for adopting and implementing the IMO´s Conventions and therefore the IMO Audit Scheme is viewed as a means of identifying weaknesses for the purpose of refining and perfecting the system.

The smooth development and operation of Cyprus Shipping is still hampered by the Turkish trade restrictions against Cyprus flag ships, which were introduced in 1987. Since Cyprus accession to the EU, these restrictions demonstrate that the illegal and discriminatory practice followed by the Turkish Authorities not only affect Cyprus, but also the interests of the EU. The efforts to lift this illegal trade ban which adversely affect EU shipping will continue.

Of course, as representatives of the private sector of the shipping industry, the Joint Cyprus Shipowners' Association carefully monitors and assists the efforts undertaken by the government in order to efficiently upgrade and promote Cyprus flag and Cyprus shipping.

In that respect, on 19 June 2006, the Cyprus Union of Shipowners held a well attended conference where important personalities like Ministers, Ambassadors, Members of the Parliament, Politicians, etc. discussed the main challenges that Cyprus shipping is facing which resulted to tightening the cooperation between the Shipowners and the relevant Ministry of Communications and Works during the current year.

Furthermore, during the conference CUS reaffirmed its position for the establishment of a Cyprus Chamber of Shipping since countries such as Greece have proved the importance of a Chamber of Shipping in the development of shipping.

In an effort to improve further the Image of Cyprus Shipping in general, and the Cyprus Shipping Industry Profile in particular, both with regard to its substantial contribution to the Cyprus Economy and Society, as well as to the sound employment opportunities that exist in the Shipping Industry for school leavers and university graduates, the Cyprus Shipping Council launched the “Cyprus Shipping Public Relations Campaign”. The Campaign mainly involves various presentations, programmes and shipping related activities such as visits to ports, vessels, shipping companies and training schools for the proper education of politicians, children, teenagers, press/media, and the public at large, with respect to the benefits of Shipping.

Part of this Campaign is the “Day of the Sea” Event organised by the Cyprus Shipping Council, which took place on 17 September 2006, in Limassol.The “Day of the Sea” Event is a biennial “Open-Fair” social event related to the Sea and Shipping. Its aim is to increase public awareness of the Shipping Industry in general and at the same time promote the image of the Council in Cyprus, as well as maritime employment both onboard and ashore. Admission at the Event was open to the general public and approximately 7000 people attended the Event.

Last but not least, the Joint Cyprus Shipowners' Association in cooperation with the Cyprus Government will organise for the tenth time, the biennial international shipping Conference “Maritime Cyprus” on 23-26 September 2007. The Conference is expected to attract hundreds of shipping executives and experts from around the globe. The Conference is entitled “Stay Tuned: … Shipping New Image” and will focus on the following issues: Shipping New Image, Recruiting, Training and Retaining of Seafarers, and Shipowners Mission and Vision.



DENMARK

2006 was yet another year characterized by growth for Danish shipping. Danish shipping companies continue to expand in a strong global market, resulting in increases in all the financial key areas, and the industry is reaching a size that makes Denmark one of the leading seafaring nations. This position has been reached through maritime tradition and know-how combined with stable and competitive commercial conditions provided by positive political attention from successive governments and parliaments over the past decades. In light of the positive development of the industry, today shipping is Denmark's second largest export industry and the most globalized as 80 percent of the turnover pertains to transport outside the EU.

The Danish merchant fleet has never been larger and the historically high inflow of foreign currency amounting to EUR 22 billion is an indication that the level of activity of the Danish shipping companies has never been higher, resulting in an increase in employment to a present figure of about 30,000 people. Especially onshore employment is growing. Several shipping companies have considerably extended their head office staff in Denmark, just as a number of new shipping companies have been established in recent years. It is reasonable to predict that this increase in activities will continue in the next few years as the Danish shipping companies' building programme is 15 million dwt, distributed over 300 vessels at a total value of more than EUR 11 billion.

For the continuing growth and development of Denmark as a leading shipping nation, the Danish Minister for Economic and Business Affairs published an action plan that includes more than 60 specific initiatives, grouped under seven headings, covering training, recruitment, technical special rules, tax rules, etc. The action plan also includes a proposal for an adjustment of the tonnage tax system to take into account the fact that other shipping nations in the EU and Asia have more advantageous conditions in some areas than Denmark.

During the coming year specific initiatives from the Commission are expected. It is not yet clear what proposals will be made and in which direction they will take us. For instance, this applies to the Common European Maritime Space, which on the one hand can contribute to removing customs barriers and other administrative obstacles, but on the other hand can set up new EU barriers in the form of special rules for navigation in the EU, e.g. in the operational or labour market area. The final drafting of these specific initiatives will therefore set the scene for the work in the years to come, where the Danish Shipowners' Association particularly will urge the EU to maintain its global view. Such a policy will ensure continued development in the EU of shipping as the world's largest maritime cluster, whereas a more inward looking agenda will hamper the development of shipping to the detriment of the entire EU.



ESTONIA

There have been only a few changes in the shipping sector during the second half of 2006 and the first half of 2007.

Eventally, the State decided to grant state aid to the shipowners operating cargo vessels. However, it was very small, only a mere 30 million Estonian kroons per year, and for a very short time period - the publicly notified initial period would only be for two years. As there were parliamentary elections in March 2007 and the new government does not favour any state subsisidies at all, the prolongation of this aid or granting of more aid to the shipping sector remains most uncertain. Passenger vessels do not currently receive any state aid.

At the same time, it is passenger transport which is more developed in Estonia. Tallink Grupp is investing more in new buildings; in April 2007 Tallink was delivered a new high speed vessel,Star.With the new ship, Tallink provides a year-round high speed service on the Tallinn-Helsinki route and the high ice class of the vessel enables operation in any winter weather conditions. Tallink also has under construction 3 more passenger vessels; two are sister ships of MV Galaxy and one, which will be delivered in Spring 2008, is another high-speed vessel.

Considering the current situation in Estonia, including the negative attitude of the state authorities to take the necessary steps to improve competitiveness of Estonian shipping sector in general, Tallink has taken two of its vessels out of the Estonian Ships Registry and these are now operated under the Latvian flag which is more favourable.

The ESCO group, being one of the few cargo operators in Estonia, has expanded its logistic services in Norway, Denmark, the Netherlands and Finland and is now targeting the market in the Baltic states.

NT Marine's single hull tanker Viimsi has been rebuilt as a double hull tanker, fully complying now with the relevant international conventions. NT Marine has strengthened its positions on Russian market operating two tankers there.



FRANCE

France has had a new government for 3 months and expects a large range of reforms.

So far, there has been no significant change in the French flag fleet, which was stable at 240 vessels. The unions continued to have strong objections to the second register. French shipowners had some 193 vessels under the second register, mainly small/supply vessels.

There has been an issue of the captain's nationality under RIF ( Registre International Français). The system is due to be changed by law so that the nationality could be European, rather than French, accordingly to the EU legislation. Under the RIF regime, the captain and substitute have to be European, together with a condition of language competence.

An issue had arisen over the working time of the captain, the administration deciding that he is subject to the same regime as other seafarers.

The European Commission had reached a decision on the tax system which had been launched in 2004. The outcome was a criticism of the French government, and a requirement to terminate the system; however, there was no requirement for reimbursement of state aid, which was a considerable relief. There is now no specific system for maritime investment but a general investment scheme under article 39C of the French tax code. There is a tonnage tax system with which there are currently no issues.

Training remains a problem that has to be considered in the larger picture of maritime employment and the lack of officers, but the French administration is currently considering the issue.



FINLAND

The Finnish fleet has remained almost unchanged during the last year; a few vessels have been sold or newbuildings put into traffic. According to statistics from the Finnish Maritime Administration, Finnish Shipping (ships over 500 gt) consisted of 141 ships with a total deadweight of 1.5 million gt at 1st of June 2007. The new building reserve is also small which is somewhat worrying as the average age of the ships is climbing over twenty years. In total there are about 9 newbuildings on order for Finnish owners (June 2007) and, hopefully, all will be carrying the Finnish flag.

Finland's own foreign trade shipments rose to 99,2 million tons, being nearly 10 Mt more than in the year 2005, transit shipments being 6,6 million tons. The Finnish merchant fleet transported 28 % of the exports and imports of the country. The number of passengers transported by sea between Finland and other countries was 16,3 million of which over 50% was transported by Finnish vessels.

The Finnish merchant fleet is still almost totally manned by Finnish seafarers (7500) due to strong opposition from the Seamen's Union against foreign employers. The Finnish Seamen-Union is to our knowledge to day the only union in Europe still fighting for a 100% national crew on board Finnish ships.

There are signs for optimism for the situation of Finnish shipping. After years of discussions, the new government and Parliament are finally convinced that if Finland wants to maintain a commercial shipping fleet of its own it will have to introduce the same state aid measures as in other EU countries.

A distinct part of the new Government's programme is shipping. In that programme it is especially stated that the tonnage tax legislation will be revised to a more competitive level. Also, the use of other state aids will be looked into. Finnish shipowners hope to see themselves in the same enterprise environment as is the situation in the most other EU countries.

The aim of the Finnish shipping policy is to ensure a positive development of the Finnish merchant fleet as well as a sufficient transport capacity.



GERMANY

German shipowners operate the largest container fleet in the world. The German fleet is also the most modern in the world. About half of its tonnage is less than five years old. This is an important indicator of its reliability and eco-friendliness. German shipping remains the backbone of globalization.

The past year has been overall very positive for the German maritime industry, and especially for the shipping sector. The cargo transported rose once again and the charter rates have levelled out above the 10-year average. The freight rates have been less rosy, though. Massively increasing costs have hampered some results. As a major problem, the German shipowners encountered dramatically rising bunker costs. They have almost tripled in less than five years.

However, there are many reasons to look very optimistically into the coming twelve months.

The key indices for the German fleet have been very positive in the recent past:

The German merchant fleet is still growing strongly at more than 10% per annum, having reached beyond 3.000 vessels.
German ship owners currently have on order around 750 ships.
For the first time in history, the German merchant fleet has risen above 60 million GT.
The leading institutes predict a growth of the world economy of 5,3%, world trade will grow by 8,9%.


German shipowners are certain that, despite the large order numbers, the world market will easily absorb the new tonnage. Shipping remains by far the most economically friendly means of transport. Latest analysis shows that the number of ships ordered may even be too small.

Two factors have helped to create the current boom of the German shipping industry: the right entrepreneurial decisions and a political framework that is hugely supportive of the maritime transport sector. In late 2006 the German Chancellor, Dr. Angela Merkel, reconfirmed the pillars of the shipping policy. The tonnage tax system and a number of voluntary steps by the social partners have created an atmosphere of stability and mutual trust. As part of the so called “German Maritime Alliance” the German shipowners have promised to increase their training efforts and bring even more ships under the German flag.

The German shipowners have undertaken in 2007 a number of unilateral steps to ensure that the maritime industry can continue to thrive. In particular, the members of VDR have gathered to put three million Euros on the table to be invested in training schools for seafarers. This will help to smooth the currently dramatic shortage of officers in the future. The number of graduates from seafarer schools has to triple in order to satisfy the growing demand. German shipowners are confident that this “positive problem” - more highly qualified jobs have been created than anyone had foreseen only a few years ago - will be solved in a few years.



GREECE

In 2006 the Greek-owned fleet strengthened its power by increasing its total tonnage (dwt) by 3.6% whilst it maintained its international premiership, accounting for 16.9% of world tonnage (dwt). More particularly, Greek owners control 19.7% of the world tanker fleet (chemical, crude oil and product carriers) and 23.2% of the world bulk carrier fleet in terms of dwt (excluding ships currently on order). Moreover, Greek-owned vessels flying EU Member States' flags amount to 48.2% of EU shipping (dwt).

In the shipbuilding sector, Greek-owned shipping achieved similarly impressive rates. By the end of
February 2007 newbuilding orders by Greek interests amounted to 612 vessels, representing 47.9 million dwt, an increase of 86% compared to the newbuilding tonnage of 2006. Out of these vessels, 340 are tankers corresponding to 19.7% of world tonnage (dwt) -- i.e. 120 crude oil tankers amounting to 22.1% of world tonnage (dwt) and 220 chemical and product carriers amounting to 16.4% of world tonnage (dwt) -- and 164 bulkers corresponding to 18.3% of world tonnage (dwt) on order in this category. The impressive order book of newbuildings on behalf of Greek shipowners resulted in a further reduction of the average age of the Greek-owned fleet to 14.3 years compared with 15.3 in 2006, whereas the average age of the Greek-registered fleet is 11.1 years compared to 11.7 years in 2006 (including vessels on order).

According to the National Bank of Greece, in order to manage this fleet, more than 1,150 shipping companies operate in Greece employing more than 11,500 persons, the vast majority of whom are Greeks. In a wider context, the maritime cluster creates 160,000 jobs, and employs 50,000 seafarers. Despite the decrease in freight rates during 2006, the gross receipts from transport services increased further by €453mn reaching €14,324mn. (3.3% compared to the particularly high earnings of 2005). It is worthwhile to note that the net receipts from sea transport services create 4.23% of the Greek GDP, whilst they finance 23.4% of the country's trade deficit.

Recently adopted measures by the government (2007) in support of competitiveness of the Greek flag fleet are expected to attract newbuildings and vessels in service under other flags. This will further boost the Greek register, provide more employment for Greek seafarers and enhance the role of Piraeus as a maritime centre maximizing the benefits to the Greek economy from shipping activities.

During 2006, the relations between China and Greece were intensified in the shipping sector and closer ties were forged respectively. Shipping relations with Japan and South Korea are also moving along the same lines. China, the Gulf States and Oman expressed their interest in investing in Greek ports. The recent signature (2007) of the Bourgas / Alexandroupolis pipeline and the Turkey / Greece / Italy natural gas pipeline enhanced the strategic importance of Greece both as an energy hub moving oil and gas to Europe as well as the eastern gateway and trans-shipment center to the EU. Since maritime transport allows the energy sector to fulfill its essential role as the engine of our societies, the Greek fleet proved to be instrumental in this process. In the words of the Greek Prime Minister “shipping is a dynamic parameter of Greece's foreign policy”.



ITALY

Size and composition of the fleet
At the end of 2006, the Italian merchant fleet consisted of 1,480 ships totalling 13,144,608 gross tons, broken down as follows: over 1,000 GT : 713 ships, totalling 12,895,551 GT; from 100 to 999 GT : 767 ships, totalling 249,057 GT. As compared with the end of 2005, an increase of 11% in tonnage and a increase of 3% in the ships' number has been recorded.

The fleet flying the Italian flag accounts for 99% of the total Italian owned merchant fleet and amounts to 1,472 totalling 13,105,437 GT , thanks to a large number of new ships and also to the growing registration in the Italian International Register.

The Italian units registered in the International Register are 567 totalling 11,703,530 GT; those in the Ordinary Register are 905 totalling 1,401,907 GT. The Italian ships temporarily flying a foreign flag (bareboat charter registration) are 8 totalling 39,211 GT , representing about 0,3% of total tonnage. The proportion of the fleet owned by totally or partially privately owned bodies is 95%.

The Italian fleet proves again to be young: 57% of the ships are less than 10 years old and 33% have not yet completed their 5th year of service. The modernization of the vessels, initiated during the last 10 years, has continued. Between 1997 and 2006, 475 ships were delivered totalling about 6,5 millions GT.

Balance of maritime payments
During 2006, the strong seagoing orientation of Italian foreign trade was confirmed, as the overall volume of international transactions for the maritime transport of cargo and passengers registered €12,322 mn compared to €18,213 mn for all the other systems of transportation taken together.

The role of the maritime system in the Italian economy
The maritime system produces about €36,518 mn, equivalent to 2.7% of GDP, the same amount of the agricultural sector. The most significant portion of the maritime economy is to be assigned to the maritime transport of goods and passengers, with yielding dimension of €15,684 mn, equivalent to 43% of the entire maritime system. This is a sector with a strong capacity to produce profit: the national system creates a yielding of over €210 corresponding to each additional €100 that go to the shipping sector because of new investments or increased exports and consumptions. From the occupational point of view, it is estimated that 100 additional labour units in the maritime sector become 328 in the entire economic system. At the end of 2006, on-board jobs with the Italian fleet are estimated more than 30,500, for an increase of 11% over the previous year.

Competitiveness of the Italian fleet
With the introduction of the international register and the tonnage tax, the reform of navigation has been completed, in compliance with the European Community policy. This means that not only is the Italian shipping industry currently able to operate on an equal footing with the international competition, but there has been a noteworthy revival of maritime activities, with the result that decision-making and administrative hubs that might otherwise have been moved to offshore areas have been kept (and in some case relocated) in Italy.

Thanks to massive investments in new vessels, and the resulting movement of enormous financial resources, the Italian shipping industry has taken on the dimensions of a leading industrial sector in the past few years. For this reason, all the different components of the finance industry (banks, mutual funds, private equity, stock markets) are looking at maritime activities from a different perspective. Orders for new vessels by Italian shipping enterprises are forecast to reach 6, 7 and 9 billion dollars over the next few years.

In the last seven years, is estimated that the Italian shipowners have invested €27 bn in new buildings.



LITHUANIA

The trend showing the number and capacity of merchant vessels under Lithuanian flag remains stable for the second year running. As of 01.01.2007 there were 169 vessels of 473395 GT registered in the Lithuanian maritime ships' register. There are about 2500 seafarers employed on the national fleet with about 8000 serving on foreign ships. Despite the fact that Lithuania is considered as an “exporter” of seafarers, 2007 was the first time that the biggest national companies have faced a shortage of seafarers.

Following the decision of the Governmental Strategic Committee to approve guidelines on the basis of a study on the “Relevance and Economic Impact a Modern Shipping Policy on Lithuania's Economy” in 2004, the Lithuanian Shipowners Association has focused on two main fiscal measures: to introduce of Tonnage tax system and to reduce Social contribution taxes.

In July 2006 the European Commission approved a scheme for a Tonnage Tax system. Further steps have been taken by Lithuanian institutions - in December 2006 the system was approved by Government and in May 2007 by Parliament. Although the Tonnage system was implemented in 2007, shipping companies can already enjoy this system for the 2007 fiscal year. More complicated, and raising many discussions, is the remaining question of the reduction of social contribution taxes.

In 2005, the Lithuanian Government and stakeholders came to a mutual agreement suggesting a reduction in Social contribution taxes. Accordingly, in March, 2006 the endorsement of the European Commission was received. In June 2007 the Lithuanian Parliament voted in favour of such reductions, but the Lithuanian President vetoed the law. The main argument, that one social group of labour can not be exclusive from others in respect of social contribution, remains strong.

There is a need for the competitiveness of the Lithuanian shipping sector to be increased and for the continuing improvement of the reputation of the Lithuanian flag; the further application of state aid measures as described by the Community Guidelines on State aid to maritime transport would stimulate a renewal of the Lithuanian fleet.

Altogether, 2006 was profitable for the main Lithuanian shipping companies.



MALTA

The number of ships registered under the Malta Merchant Shipping Act was 4,304 with a total gross tonnage of over 25.5 million (as at the end of September, 2006). Of these, about 1,400 ships of 25.3 million gross tons, mainly European owned, are engaged in the carriage of bulk liquid and dry bulk cargoes on international trades, including cross-trades between ports in the growing Asian markets and other continents, thus providing valuable invisible earnings and resources for the development of the European shipping industry and the European (and Maltese) economy.

This signifies that during 2006 the Malta Ship Register has continued to grow and has retained its place as the second largest register in Europe and one of the 10 largest registers in the world in terms of tonnage.

Malta has adopted and implements all the major international maritime conventions including SOLAS 74/78 (including 1988 Protocol), Load Lines 66 (including 1988 Protocol), Tonnage 69, Colreg 72, Marpol 73/78, STCW 78 (including 95 amendments), London Convention 72, Sar 79, Fal 65, INMARSAT, SUA 88 (including 1988 Protocol), OPRC 90 and OPRC - HNS (Protocol 2000), Fund 92, CLC 92 and LLMC 96.

Other Conventions / Protocols such as Annexes IV and VI of Marpol, the Bunkers Convention 2001, the HNS Convention 96 and the Anti-Fouling Substances Convention 2001 are in the process of being ratified. Malta is an elected member of the Council of the International Maritime Organization (IMO).

In a recent study it has been estimated that the wideranging maritime cluster that has developed around shipping in Malta makes a significant contribution to the Maltese economy (about 15% of GDP) and a lot of importance is therefore given to the continued growth of the Malta Register as a quality ship register in Europe.

In line with its policy that growth can best be achieved through quality, the Malta-flag Administration has strengthened its ship inspection regime both nationally, through inspectors in the direct employ of the Malta Maritime Authority and internationally, through a network of overseas inspectors covering ports in at least 78 countries.

This emphasis on safety and quality has earned Malta a place as a full member of the Paris Port State Control MoU and Maltese ships are now classified in the White List of the Paris MoU. Also, the Malta Maritime Authority is a founder member of and an active participant in the Mediterranean MoU on port state control of which the Executive Shipping Director of the Authority is the current chairman.

The interests of international shipowners who have made the Malta Ship Register the register of their choice and confidence are represented by the Malta International Shipping Council (MISC) which was established as a notfor-profit association of shipowners in 2005. MISC is a full member of the European Community Shipowners' Associations (ECSA).

In the course of the year, MISC has exercised its lobbying and representation functions on a number of issues which impact on shipowners and the shipping industry in general. Representations have been made directly to the Government of Malta and the maritime authorities in Malta on such issues as the court case relating to criminal sanctions on ship-source pollution, the maritime safety packages, competition rules for liner and tramp shipping, the ILO Maritime Labour Convention, short sea shipping, European port policies, security and advance cargo declarations, civil liability and financial guarantees of shipowners. MISC also regularly makes representations to the MEP representing Malta in the European Parliament on issues of importance or concern to shipowners.

During the twelve months under review, prominence has also been given in Malta to the Green Paper on a future maritime policy for the European Union. MISC has actively participated in a Seminar on the Green Paper held in September, 2006 in the presence of EU Commissioner Joe Borg, who is responsible for the consultation process on the Green Paper. More recently, in February, 2007, MISC had another opportunity to put across its views and those of ECSA when its General Secretary made a power-point presentation at a National Conference on the subject of “Towards a Holistic Maritime Policy - The Competitiveness of Shipping”, in which the Prime Minister and the Minister responsible for shipping took part. The emphasis of this presentation was that an EU maritime policy should aim at a set of positive measures which will support, energize and render more competitive the maritime transport industry and its substantial cluster of marine related activities, in consonance with the Lisbon Strategy for economic growth and increased employment in Europe and in harmony with the goal of safeguarding of the marine environment.



THE NETHERLANDS

2006 saw a substantial expansion of the world fleet as a result of strong development of world trade. However, rates for tonnage transported did not match those achieved in the top year 2004. This may be attributed to the increase in the supply of ships' capacity and a slight reduction in the demand for said capacity. High bunker prices also affected results in 2006.

Ten years ago, in 1996, the - then - new shipping policy was presented. This government policy -considered to be innovative in many of its aspects- was aimed at the continued development of not only the Dutch shipping industry but also the entire maritime cluster of the Netherlands (totalling 190,000 jobs). The shipping policy was very effective, judging by the growth of the fleet registered in the Netherlands by 50 percent over the period between 1996 and 2003. Employment increased by 57 percent and added value by 67 percent over the same period. The Dutch shipping policy set a shining example and was therefore copied and improved by a considerable number of European countries. This has caused the Netherlands to lag behind. On the occasion of the 10-year anniversary of the Dutch shipping policy it has lost momentum. In actual fact this has been the case since 2003, which is in sharp contrast to the world fleet, the total tonnage of which is expanding at a rate of 7 percent annually. Dutch shipowners are ordering new ships - benefiting other segments of the maritime cluster in the Netherlands like shipyards and maritime suppliers - but these are largely intended to replace existing ships in the fleet. In real terms the fleet is barely expanding and therefore losing ground. Development of the added value and employment are also failing to keep up with the Dutch economy as a whole.

For the shipping industry to be able to continue to set the course for the entire maritime cluster in the Netherlands it needs new impetus to allow the Dutch shipping industry to go full steam ahead once again. To this end the KVNR presented its vision paper: The Shipping Industry in the Netherlands: Full Steam Ahead, on 6 November 2006 to the minister of Transport, Public Works and Water Management. In this paper the KVNR outlines its vision of the decade to come, set out in a number of objectives, and offers the tools to help realise this vision. This is the KVNR's contribution to the current evaluation of the shipping policy being carried out by the Ministry of Transport, Public Works and Water Management as well as to modification of the policy. Recommendations regarding modifications to the policy are expected by early 2008. Another of the vision paper's purposes is to contribute to the process - instigated by the European Commission - of formulating an integrated maritime policy (the Maritime Green Paper).

One of the objectives set out in the vision paper is to increase the number of ships flying the Dutch flag from 750 -now- to 1,200 by 2016 and to achieve an increase in the number of Dutch seafarers proportionally to the growth of this flag. To be able to realise these objectives a number of priorities have been listed that should be jointly addressed by all concerned (shipowners, nautical colleges, trade organisations and government). Cooperation in this matter is imperative and -to the
KVNR- an obvious requirement.

The level of service rendered by the Netherlands' Shipping Inspectorate (NSI) is an area of grave concern. Certification regarding registration and manning of ships registered in the Netherlands is issued by this organisation. If the Dutch register is to remain an attractive one compared to other -EU and non-EU- registers, a customer-friendly, fast and high quality level of service is essential. For quite some time now the NSI's service has been very much unsatisfactory, in spite of promises of improvement. Consequently, the appeal of Dutch register and Dutch seafarers alike is at serious risk.

The fiscal maritime climate is pivotal to the Dutch shipowners' competitive position. Hence the prominence granted to fiscal policy in the 1996 shipping policy. Fiscal policy comprises the tonnage tax regime and the wage withholding tax facilities. In the tonnage tax regime profits derived from shipping activities are taxed and fixed at a favourable rate thus creating a ‘level playing field' amongst the various competing registers, especially those from outside the European Union. Improvements to the tonnage tax regime are essential to both the regime itself and the Inland Revenue's interpretation thereof. The latter should be in alignment with the interpretation used in other European countries. The regime should offer shipowners the option of choosing for themselves the moment from which tonnage tax is to be applied to their shipping activities.

The wage withholding tax facility in the shipping industry was aimed at improving Dutch seafarers' position in the labour market. It offers Dutch shipowners a reduction on employment costs for those of their seafarers that are taxable in the Netherlands and/or liable for social security payments. It would be much harder to continue employment of Dutch seafarers without this system. At the end of their working life at sea, seafarers commonly continue their careers as part of shipowners' shore-based operations or in other parts of the maritime cluster. Being technically trained professionals they play an important role within the maritime cluster. In the KVNR's view, improvement of this system of reduced contributions regarding Dutch seafarers is of the essence in order to reduce disadvantageous employment costs to an internationally competitive level and thus to secure their position in the labour market.

The abolition of the regulation that taxes meals, which are provided to the seafarers on board the ship, and the introduction of the Life Course plan as well as a number of other -technical- issues have unintentionally caused the system's effectiveness to become eroded. The KVNR is currently working on proposals to restore the system of reduced contributions to European levels.

A new government has come into power at the beginning of 2007, with a new coalition agreement. One of its objectives is to downsize the volume of bureaucracy in the government.While in agreement with the principle of continuously monitoring the volume of bureaucracy, the KVNR does point out the risk of a possible loss of knowledge and expertise. This loss would lead to an erosion of maritime policy-making, both at national and international level. Some of the NSI's downsizing may be realized by transferring duties regarding certification to the private market. The sound and timely execution of other aspects of service however will have to continue to be safeguarded.

In facing the future, we express the expectation that in the very near future the utmost priority is going to be accorded to restoring the NSI's level of service. Also, the government and the shipping industry together will have to address the priorities -as indicated in the vision paper-in the coming period. Then, and only then, growth may be restored, a growth that is essential to the shipping industry itself, on-board employment and the Dutch maritime cluster as a whole. The shipping industry can only continue its contribution to the growth of employment and the Dutch economy if its own potential for growth is restored.



NORWAY

Developments in the Norwegian shipping industry
Shipping is a major Norwegian industry and the second most important export industry, generating export revenues (gross freight income) of more than 82 billion NOK (10 billion Euro) in 2006. Norwegian shipping companies form the core of Norwegian maritime industries cluster employing some 90.000 Norwegians.

Instability and controversy have marked the Norwegian maritime policy over recent years. The Norwegian tonnage tax system, which was introduced in 1996, is no longer competitive compared to international systems, including tonnage tax systems in other European countries. Over the last years a clear trend has been seen in which new shipping projects and activities, controlled be Norwegian interests, are located outside Norway.

However, the red-green, majority government, which took office in the autumn of 2005 has committed itself to promote global competitiveness of key Norwegian industries, including the maritime industries. The Norwegian Minister of Trade and Industry is currently preparing a national maritime strategy which will be submitted in the autumn of 2007. In parallel to the process of preparing the strategy, the Minister of Finance is considering a revision of the tonnage tax system. A proposed revision may be submitted to the Parliament in October 2007 in connection with the proposed state budget for 2008. The Norwegian Shipowners' Association is hopeful that this will restore the competitiveness of the Norwegian tonnage tax system.

It is estimated that Norwegian shipping companies will have a substantial recruitment need in the coming years, due to a growing fleet as well as a significant share of the seafaring personnel reaching retirement age. Recruitment of Norwegian and foreign officers has become harder, shortages are reported in particular in offshore service, chemical and gas tankers are areas where it is reported.

Against this background the NSA, in co-operation with the Norwegian Maritime Forum, in January 2007 launched a major three year campaign to promote the maritime vocation among Norwegian youngsters. The campaign has generated much public attention and the campaign internet home page had almost 80.000 unique visitors during the first 10 weeks.

The Norwegian controlled fleet increased by 7.8% to 40.0 million dwt from January 2006 to January 2007. The fleet grew by 132 in numbers to 1.774 vessels. More than 2/3 of the fleet fly EEA-flags, including more than fifty percent under Norwegian flag.

At the beginning of 2007 Norwegian shipowners had newbuilding contracts for 356 ships, valued at 114 billion NOK, in addition to 25 rigs on order, valued at 40 billion NOK. The total value of 154 billion NOK (18,75 billion Euro) represents a 60% increase compared to January 2006. Norwegian yards accounted for 121 of the ships on order, another 54 orders were placed at other European yards in Poland, Spain, Finland, Netherlands, Italy and Germany.

As of February 2005 some 55,500 persons of more than 60 different nationalities were employed onboard Norwegian controlled merchant vessels and rigs. Some 15,200 of these were Norwegian nationals, 10.600 of other EEA-nationalities and another 1,100 of other European nationalities. The most important non-European nationalities serving onboard Norwegian controlled vessels were Filipinos and Indians, represented by 16,600 and 4,000 seafarers respectively.



POLAND

The significance of shipping in particular, and the entire maritime cluster as a whole, was the subject of several seminars and noteworthy public statements by various representatives of the shipping industry in the past years. The continued public debate finally culminated with the establishment of an independent Ministry of Maritime Economy in May 2006, thus highlighting the importance of Poland's maritime industry in the governmental programme of economic reforms.

The first tangible sign of the process initiated by these reforms was the introduction of a new Tonnage Tax Law of 24th August 2006 enacted by the Polish Sejm (Parliament) and thereafter given Presidential assent with the aim of enticing shipowners to re-flag their vessels with the Polish Register of Shipping. The new Tonnage Tax Law entered into force as from 1st January 2007.

In addition to this new legislation, the Ministry of Maritime Economy has also been concentrating its efforts on supporting maritime stakeholders' activities targeting compliance with the applicable international standards and Community Law, especially in the spheres of safety, security, environmental performance and on-board working conditions.

The next step forward is a proposed new law applying to engagement and employment of seafarers on seagoing vessels, which was announced for consultation on 9th February 2007.Yet, there are still plenty of efforts by the shipping community to amplify the necessity for early implementation of maritime transport reforms in line with the EC Guidelines on State Aid to Maritime Transport (2004/C 13/03). Although the impact of the new Tonnage Tax Law remains to be assessed in the coming months and years, the majority of the Polish-owned fleet continues to be registered under the flags of third countries which enjoy a significant competitive edge over the Polish Register of Shipping.

As at 1st January 2007, Polish shipowners operated a fleet of 121 vessels (wholly owned or co-owned) totaling 1,821,400 GT or 2,532,500 DWT; only 14 ships were registered under the Polish flag , representing 11,6 % of total number of ships and 2.0 % of total GT.The average age of the fleet was 20,2 years. 4 newbuildings were commissioned in 2006 (26,400 DWT and 30,600 GT in total) and 13 units sold or scrapped. In addition, 2006 saw a number of purchase transactions involving Polish shipowners.

The total volume of cargo and passengers carried by the fleet in 2006 amounted to some 10,000,000 tons of cargo, an increase of 7 % in comparison to the previous year, and 942,000 passengers, 6.2% more than in 2005.As at the and of April 2007 there were 10 (plus 4 options) bulk carriers, in the range of DWT 30,000 - 80,000, 6 MPP, heavy lift carriers of DWT 31,000 each and 2 Ro-pax vessels ordered by Polish shipowners for deliveries in 2008 - 2011. Statistical data for 2006 indicates that 21,800,000 tonnes were unloaded and 38,700,000 tonnes of goods were loaded in Polish Seaports.

Finally, an analysis of Poland's employment structure reveals that as much as 55 % of the total workforce was engaged in the provision of various services, contributing by up to 64.5 % of Poland's GDP achieved in 2005. Of this the Polish Maritime cluster contributes some 13 %.



PORTUGAL

Although keeping a permanent pressure on the Maritime Administration, the Portuguese shipowners saw one more year gone without having a package of positive measures adopted by the Portuguese Government (such as the tonnage tax), based on the Commission State Aid Guidelines.

Nevertheless, at the end of the year, the Minister of Transport presented a preliminary document containing the “Strategic Guidelines for the Maritime and Ports Sector” in which some (but not sufficient) measures were proposed for maritime transport. As requested by the Minister, the Portuguese Shipowners' Association has proposed a set of adjustments to be introduced in the document in order to make it more consistent and effective. So far, no concrete reaction to this contribution has been received, and the most achieved was that the subject is being duly analysed.

Portuguese Shipowners are afraid this can be “an empty box”, as has happened with other similar Government initiatives in the past. Meanwhile the fleet continues to decline, and the expectations to have a healthy maritime climate to develop shipping and the maritime cluster, are becoming more and more hopeless.

On the other hand, maritime education and training are still waiting for a reform to adjust it to the real needs of employers and, consequently, the lack of seafaring personnel has become a critical bottleneck for the Portuguese shipowners as well as for the entire maritime sector.

Depending on the results of the proposed maritime policy, shipowners are in a position to implement a programme, with the support of other stakeholders, to encourage young people to consider a career involving the sea.



SLOVENIA

In spite of its smallness, the Republic of Slovenia is well aware of the significance of transportation and, within it, the position of maritime transport. Its geographic and transport position within Europe is one of the advantages of Slovenia.

The leading Slovenian shipowner Splosna plovba has a tradition of offering its maritime transport services on the international maritime market for 53 years continuously. It operates 20 vessels of 684.135 dwt in the tramp market and also in liner services on the Asian market.

In 2006, the Resolution on the Transport Policy of the Republic of Slovenia was adopted, which emphasizes that it is essential to secure better conditions for the growth of the maritime sector and, consequently, the increase of the number of Slovenian seafarers, thereby, enabling conditions for a competitive approach in the world market. All this is achievable with adequate changes in the system of taxation, i.e. the introduction of the tax based on tonnage and with changes to the income taxation of seafarers, including relief for social security contributions.

In 2006, the Tonnage Tax Act was in preparation and was adopted by the Slovenian Parliament in June 2007, and sent to the European Commission for approval. It is foreseen that the act will come into force in autumn 2007, upon approval by the European Commission on the scheme of state aid as per the Tonnage Tax Act. The Slovenian taxation legislation in this field will thus be harmonized with other European maritime countries.

The Slovenian taxation legislation introduced in 2006 increased relief for the taxation of seafarers and therefore somewhat facilitated the conditions of employment of Slovenian seafarers, in spite of the fact that such a taxation basis is still rather high and is not comparable to the relief offered to seafarers employed with other European shipowners.

Slovenian shipowners are confronted with a deficit of specialized seafarers, especially marine engine technicians and engineers. Companies are obliged to employ such skilled labor on the international market.With the aim of improving the attainment of a domestic workforce, the company Splosna plovba has invited applications for scholarships in all fields at the Secondary Marine School Portoroz.



SPAIN

After the slight reduction experienced the previous year, in 2006, the tonnage of the total merchant fleet controlled by Spanish shipping companies increased by 7.0%, in terms of GT and 4.4% in dwt.At the beginning of 2007, Spanish shipping companies controlled 287 ships with 4.368.530 GT and 5.288.961 dwt.

Out of these totals, 171 ships (59.6%), with 2.31 million GT (52.8%) and 2.09 million dwt (39.5%) were flying the Spanish flag, all registered in the Special Canary Islands Register (REC). The controlled fleet operating under foreign flags grew by 11.1% in GT; and 11.5% in DWT, adding up to 116 ships, 3 more than in 2005. Last year Spanish shipping companies received only 5 newbuildings, of which 3 were registered in the REC and the other 2 in other EU registries. In the last 4 years, the total investment in newbuildings reached 2.0 billion euro.

During 2006, there has been a significant increase, by 23.7%, of the tonnage of bulk carriers fleet controlled by Spanish shipping companies. In terms of units, the passenger ships registered the highest increase, with 11 additional vessels.

Spanish seaborne trade (imports + exports + national cabotage) increased by 4.1%, reaching a new record 342 million tonnes. General cargo trade increased by 10.5% to 99.4 million tonnes, dry bulk rose by only 0.9% to 106.3 million tonnes and liquid bulk shipments by 2.4% to 136.4 million tonnes.Transport demand increased strongly in exports (59 million tonnes, +8.6%) and less in imports (238.9 million tonnes, +3.7%),while sea transport in cabotage trades only increased by 0,6% to 44,0 million tonnes.

Spanish exports consist mainly of general cargo (61.8%), while most of the imports are bulk commodities, both liquid (46.0%) and dry (37.5%), summing up together 83.5% of imports. In cabotage trades, 53.3% of the tonnage transported is general cargo, 27.2% liquid bulks and 19.4% dry bulks. In the last 10 years, Spanish seaborne trade has increased by 51.1%, of which 33.5% in the last 5 years, which is equivalent to an annual average growth of 4.2%.

As from 1st January 2007, the Spanish flag ranks 21st in the White List of the Paris MOU, improving from the 30th position in 2006, as a consequence of the good result obtain by Spanish ships on PSC inspections during last year. Spanish shipowners, coordinated by ANAVE, continue working with the Maritime Administration to consolidate and improve this positive achievement.

The two major legal initiatives in the maritime field, an amendment to the Ports Law and a new Sea Navigation Law, have been blocked in the Parliament for the whole year. The Spanish Government has not been able to obtain sufficient support from the opposition parties for their adoption.

On the contrary, with the support of several Ministries and of the major maritime Union organisations, it was possible to obtain, by the end of June 2007, the approval by the Government of a special regime that will facilitate the employment of non-European seafarers onboard ships registered in the REC - a positive measure that would help to restore, to some extent, the competitiveness lost by this register in the last two years.



SWEDEN

The Swedish Shipowners' Association celebrated its centenary in 2006. The highlight was, of course, the annual general meeting on 18 May, in Göteborg and the subsequent gala banquet with H.M. King Carl XVI Gustaf as the guest of honour.

Shipping-related research has had a breakthrough as a result of the investment in the marine competence centre Lighthouse, located in Göteborg. The project was inaugurated on 7 December, 2006, in conjunction with the installation of a new bridge simulator. Just in time for the inauguration, we were happy to learn that VINNOVA (the Swedish Governmental Agency for Innovation Systems) and the Swedish Maritime Administration had agreed to finance part of the project. All the conditions for success are now in place and it is now up to the member shipping companies to be active and plan the different research projects in the shipping sector, which are considered to be most useful for shipping.

The shipping markets have been good in recent years and have generated positive growth for shipping globally. This, of course, is very much a consequence of the trend in Asia and, not least, in China. The demand for transportation continues to rise and is creating the necessary conditions for continued favourable growth. Swedish shipping is well placed to continue to benefit from this trend.This is, however, conditional on shipping being able to operate in the same business conditions as those applying in, primarily, the EU. A tonnage tax was not introduced in 2007, as the Association had hoped, and this naturally creates an atmosphere of uncertainty about the future. Sweden has as from September 2007 a new government. Hopefully, this will mean a better understanding of the conditions for a successful national shipping industry in Sweden.

The environment is once again high on the political agenda. The Swedish Shipowners' Association is working actively and successfully on different measures for reducing emissions of greenhouse gases.

An integrated emissions trading system for shore-based industry and shipping would rapidly lead to sharp reductions at a cost far lower than that of the alternative of additional regulation of both shipping and shore-based industry.With a trading system in place, shipowners who invest in environmentally friendly ships would be rewarded. Alternative fuels, e.g. gas, which is a well-tried form of fuel for ships, would then be a realistic alternative to bunker oil with a high sulphur content.



UNITED KINGDOM

UK based shipping continues to benefit from the growth in world trade and the UK's Tonnage Tax regime remains fundamentally attractive. UK-owned shipping increased in tonnage terms in the year to March 2007 by more than 4% to 18.2m deadweight tonnes and is now 150% higher than in 2000. UK-registered shipping also continued on a rising trend, increasing by 9% to 12.4m dwt over the period. This continued growth pushed up both turnover and the contribution of sea transport to the UK balance of payments. The most recent official figures show gross shipping revenues increased to Euros17bn (£11.6bn) in 2005. Sea Transport has maintained third place in the table of service export earners, drawing further ahead of air transport and exceeded only by financial services and tourism; British shipping is now earning nearly Euros 2m (£1.3m) every hour of every day for the economy.

Maintaining this level of growth in fiercely competitive shipping markets continues to prove challenging. A stable fiscal environment is a prerequisite for those making shipping investments and two UK issues have created uncertainty; unfortunately the UK government was not to be moved from its overriding desire to reform leasing taxation and currently certain aspects of the Tonnage Tax regime are being re-examined by the European Commission. The need for both Government and the European Commission to understand the complexity of an internationally focussed shipping industry and for fiscal stability remains of paramount importance.

Ports policy has been under scrutiny at both national and EU level in 2006 with three reviews launched in the UK. The Department for Transport review of ports policy in England and Wales was launched in May, followed by a parallel reviews by the Scottish Executive and another in Northern Ireland. The Chamber has stressed the need for adequate port capacity - and for a policy framework that would encourage investment in new terminals, short sea links, deliver good road and rail links inland and enable a competitive market in port services to flourish.

One of the year's key issues has of course been the environment and a wide range of initiatives have impacted the maritime sector. In 2006 the Chamber issued an ‘Environmental Statement' to highlight best practice and to promote the image of shipping as being environmentally responsible. The industry must clearly respond to a number of challenges, not least it must demonstrate commitment to reducing its carbon impact and the Chamber has encouraged all its members to sign up to the IMO Indexing Trial so that an accurate and detailed picture of ship emissions can be developed on a sectoral and regional basis. Although the highly respected Stern Report placed the carbon emissions of shipping and rail combined at just 1.75% of the global total nevertheless a greater understanding of air emissions is urgently needed in order that measured reductions can be achieved.

On employment, the Chamber has continued to work to improve the recruitment of high-calibre young people. The introduction of the new Foundation Degree developed by the Merchant Navy Training Board has been a huge step forward and this programme which is designed to attract recruits who wish to enter the Merchant Navy and who aspire to a degree-based education, has proved highly successful in its first year.

The Chamber is fighting a proposal from the UK Government to amend its legislation under which seafarers resident in and recruited from countries other than the UK may be remunerated at different rates from their UK counterparts. The UK's laws have been challenged by the European Commission following a complaint from maritime trade unions that they were in breach of European rules prohibiting discrimination on grounds of nationality. The ability of UK-flag operators to pay market rates to seafarers from other EU Member States is essential to their competitive position vis-à-vis ships sailing under other flags. The Government is likely to make a decision before the end of 2007. Should it outlaw pay differentials between seafarers from different EU Member States, it will make it very difficult for many operators to remain on the UK register and on other EU registers.

Learning from the lessons of the successful Sea Vision awareness initiative which has attracted 70 new partners from across the entire maritime sector in the last twelve months, the Chamber has also brought together elements of the commercial maritime cluster in an informal grouping known as ‘Maritime UK'. Collective responses have been developed to two major consultations, one on the proposal for a Marine Bill in the UK and the second on the EU's Future Maritime Policy Green Paper. Both of these sectoral submissions have been welcomed by government which like the Commission is interested in improving integration in policy making and developing a more holistic approach to maritime governance.

ANNUAL REPORT
2006-2007
TABLE OF CONTENTS