Unctad Code Of Liner Conduct

Unctad Code Of Liner Conduct

Summary of Unctad Code Of Liner Conduct

An international agreement sponsored by the United Nations Conference On Trade And Development (read this and related legal terms for further details), or UNCTAD, to regularize the role and functions of shipping conferences. The code emerged in April 1974, following several months of discussion and participation by seventy-nine countries. Adoption of the code, which provides a framework within which conferences are to operate and which stipulates the bases for conference ratemaking, would supersede national regulation of conferences. The convention permits closed conferences, but an otherwise qualified carrier must be admitted to any conference trading to its home country. Each conference must have an independent self-policing apparatus. Shipper loyalty agreements are authorized, and tariffs must be available for inspection. Mechanisms must be instituted to facilitate consultations between conference and shipper organizations. Finally, fighting ships are proscribed.

The most controversial provision of the code relates to the sharing of cargo among first, second, and third flag carriers. The so-called 40-40-20 rule stipulates that 40 percent of a nation’s trade shall be carried on first flag vessels (i.e., vessels flying the flag of the exporting country); 40 percent of the trade shall be carried on second flag vessels (i.e., those flying the flag of the importing country); and 20 percent of the trade may be carried on third flag vessels (i.e., those of other countries).

The 40-40-20 rule has been strongly supported by the developing nations as a vehicle to expand their participation in the carriage of their national cargoes. The European Economic Community and Japan have also supported the rule. The United States has not adopted a formal position on the code.

The code took effect following ratification by states representing at least 25 percent of the world’s total liner tonnage, which occurred with the ratification by the Federal Republic of Germany and the Netherlands in April 1983; the formal accession of these countries put At the beginning of 1984, nations representing 28.68 percent of world tonnage had adhered to the convention. Those nations are: Bangladesh Barbados Benin Bulgaria Cameroon Cape Verde

Central African Republic Chile China Congo Costa Rica Cuba

Czechoslovakia Egypt Ethiopia Gabon Gambia

German Democratic

Republic German Federal Republic Ghana Guatemala Guinea Guyana Honduras India Indonesia Iraq

Ivory Coast Jamaica

Jordan

Kenya

Korea (Republic of) Lebanon Madasgascar Mali

Mauritius

Mexico

Morocco

Netherlands

Niger

Nigeria

Pakistan

Peru

Philippines Romania Senegal Sierra Leone Sri Lanka Sudan Tanzania Togo

Trinidad and Tobago

T unisia

USSR

Uruguay

Venezuela

Yugoslavia

Zaire

(Main Author: William J. Miller)


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