MIMA / Marine Dept of Malaysia World Maritime Day Luncheon

1. MIMA / Marine Dept of Malaysia World Maritime Day Luncheon ”International Shipping – Carrier of World Trade” By John C. Fawcett-Ellis General Counsel & Regional Manager Asia-Pacific Kuala Lumpur, 24 September 2005

3. 90% of the world’s trade is move by ship • 50,000 merchant ships trading internationally • Some 1,000,000 crew • World fleet registered with some 150 different flag states • Total freight some USD 380 billion (5% of total world trade)

4. www.shippingfacts.com

5. INTERTANKO’s vision for the tanker industry: “ A responsible, sustainable and respected industry able to influence its own destiny.”

6. AS AN INDUSTRY WE MAY NOT BE LOVED BUT WE ARE NEEDED • World Oil Consumption 3.6 billion ts • Transported by sea 2.2 billion ts • 60% transported by sea.

7. The world needs tankers

8. Regular supply critical

9. Tanker incidents: 1978-03 Number Source: LMIS, Informa, press, INTERTANKO

10. Development of tanker oil spills Source: ITOPF. Number of spills above 700 tonnes.

11. Accidental oil pollution from tankers and tanker trade m ts spilt 1000 bn tm Source: ITOPF, Fearnleys

12. AGENDA • Maintaining Supremacy of IMO & International Maritime Law • Common Structural Rules & Goal Based Standards • Criminalisation of Seafarers • Challenges to Industry Governance Structures • Other: • People issues Piracy • Ship Recycling Environmental Challenges • Competition Rules Security • Oil Pollution Liability (& Compensation)

13. Maintaining Supremacy of IMO & International Maritime Law Against the challenges of Local and Regional Legislation

14. Increasing politicization of regulation Examples: • Phase out of single hull tankers • West European Particularly Sensitive Sea Area • Moves to open up CLC/Fund Convention and link with substandard shipping • Penal sanctions adopted by EU, criminalising accidental pollution Why? • Coastal state interests versus flag states, and reduced influence of maritime constituency • Power of EU Commission

15. THE EUROPEAN INSTITUTIONS& the power plays Commission (The executive) EMSA European Parliament (Direct election) Council (Member States)

16. HOW IT WAS: Examples of positive regulatory developments (the “IMO spirit”) • ISM Code and STCW (training) • post ‘Estonia’ passenger ferry measures • IMO bulk carrier safety package • Development of ILO ‘Super Convention’ Outcomes broadly based on technical merits of arguments put forward. Industry viewpoint understood, if not always accepted.

17. HOW IT IS: The Challenges Today • More political drivers and less consideration of the technical, operational, and commercial interests • More unworkable, inconsistent and illogical regulation and less consideration of the practical aspects • More pressure for local / regional regulation and less willingness to adopt and apply international regulation

18. Maintaining Supremacy of IMO & International Maritime Law What are the threats? • 15 Years Ago the United States (OPA90) • Today the European Union • Politics post Erika and Prestige • Conflict with International legislation (UNCLOS, MARPOL) • Criminalisation • EU Commission proposals for EU Common Position at IMO

19. Maintaining Supremacy of IMO & International Maritime Law International Regulation for an International Industry What the industry seeks from the Asian region: • Consistent support for IMO and the international approach • Rejection of regional initiatives • If possible, avoidance of “block” voting to combat EU moves in this direction

20. Criminalisation of Seafarers

21. CRIMINALISATION • Traditionally accidents have been regarded as quite distinct from deliberate acts • Attitudes have changed (scapegoat mentality) • e.g. Captain Mangouras, The Karachi Eight • EU Directive on Ship-Source Pollution (despite wide industry coalition) • Canadian Bill C-15 • US approach (whistle blowing, enormous fines and rewards)

22. Criminalisation • INDUSTRY supports the investigation and prosecution of illegal discharges of oil from ships. • INDUSTRY strongly objects to criminalising accidental oil pollution and to treating seafarers as criminals • Any criminal offence of pollution from a ship must be clearly defined and in accordance with international law. • Any penalties imposed on someone found guilty of such an offence must be proportionate. • There should also be parity with any penalties imposed for pollution from land based sources. • Any suspects must be treated fairly, impartially and in accordance with international law on human rights.

23. Criminalisation Additionally • INDUSTRY expects coastal states to comply with their existing treaty law obligations to provide adequate, affordable, oil waste reception facilities. • In order to safeguard the lives of seafarers and the marine environment, INDUSTRY urges coastal states to ensure proper contingency plans are put in place so that adequate assistance and if necessary a place of refuge can be made available to a ship in distress.

24. Challenges to Industry Governance Structures: Flag Classification Societies Port State Control P&I Clubs

25. The good, the bad and … all legitimate

26. Flag State Guidelines- industry advice

27. Challenges for Flag: • IMO Flag State Audit (currently voluntary but pressure to make mandatory) • Port State Control • - Currently: white, black and grey lists • - EU moving to target non-audited flags with preferential treatment measures • Political, public, union and media pressures – especially on open registers • Industry currently providing guidance / recommendations, and moving to do more

28. Challenges for Classification Societies: • EU Challenge on Role of Class • – perceived conflict of interest between statutory and classification activities • Common Structural Rules • – ability to deliver while maintaining IACS harmony • Role relative to Goal Based Standards • – IMO/Flag states versus IACS control of Goal Based Standards • Who sets class agenda – owners, builders, flag states or class managers ? • Example coatings standards (IMO – DE discussion)

29. Challenges for Port State Control (PSC) What is needed : • Better harmonisation and consistency of standards, training, etc. across all PSC regimes • Consistency in inspection and targeting criteria – based in part on analysis of PSC records and not arbitrary mechansisms, such as quota systems • Global sharing and mutual recognition of records between MoUs, with data logged in central system such as EQUASIS • Uniformity in internal procedures, such as clear grounds for detention, independent appeal panels, close-out of deficiencies, etc. & • To ensure that the integrity of PSC is maintained

30. Challenges for P&I Clubs& Club Boards: • OECD Report – Role of P&I in respect of substandard shipping • IOPC Revision Procedures • Pending Compulsory Insurance requirements • Who manages the agenda • – Shipowners or Club Managers ?

31. PEOPLE ISSUES(HUMAN FACTORS): • Heavy recent concentration on “hardware” issues • (e.g. accelerated phase-out, CSRs, goal-based standards etc) • Yet people still “cause” most incidents

32. PEOPLE ISSUES(HUMAN FACTORS): Industry has to address : • Shortages of qualified officers (BIMCO/ISF 2005) • Renewed criticisms of training standards (time to review STCW 95 ?) • Implications/causes of fatigue (ISPS etc.) • Manning levels

33. Piracy/Armed Sea Robbery: • Extent of the problem • Focus of attention on Regions • - Malacca Straits • - Somalia • - West Africa • Developments

34. Security in the Straits: The need to tackle: The Reality The Perception

35. The Reality: • Attacks have become more violent • Attackers have become bolder – large ships attacked • Attacks are motivated by financial gain not for political reasons • The Straits are a crucial route for the world’s shipping therefor the area is uniquely sensitive

36. The Reality (cont): • MSSI • The Batam Statement • Tripartite Techical Experts Group on safety of navigation • Tripartite Technical Experts Group on security in the Straits • The Jakarta Statement • Increased Cooperation

37. Reality? • More patrols? • Better coordination of resources to tackle the root of the problem, i.e. ashore? • Cross boarder patrols – bilateral agreements? Indonesia-Malaysia – up to 5 miles? • ”Eyes in the sky” – is this 24/7?

38. The perception: • Is enough being done? • Lack of clarity on the recent initiatives? What is in place and what is proposed? • That the listing of the region as a ”war risk” area has brought a reaction from the littoral states

39. INTERTANKO’s view: • Recent initiatives must be built upon • Support the role of the IMO as a facilitator of open discussions • Welcomed the open dialogue in Jakarta • Better accessibility of information on the initiatives taken – transparency is crucial • Support the political advance in internationalising the issue

40. JWC – Listed Areas • JWC should consult more widely • Review their decision on the basis of the factual situation • Follow closely all initiatives by the littoral states

41. In conclusion: The shipping industry is vital to the global economy. All those involved in the shipping industry must strive for an industry that is: • Responsible • Respected • Sustainable • Able to influence its own destiny

42. Ship operators alone cannot safeguard the marine environment All parts of the shipping industry must be responsible and seek to continuously improve

43. Commitment to Continuous Improvement by all stakeholders in the maritime businesses Designers Shipbuilders Class Equipment Suppliers Financiers / Guarantors Charterers Operator/Manager Owner P&I Hull insurers Cargo Owners Brokers Flag states Waterways authorities Coastal States Ports & Terminals Labour providers Tug operators Bunker suppliers Pilots Agents Salvers Paint Suppliers Repairers Spill Response Ship Breakers

44. Tanker Event 2006 Singapore 29-31 March 2005 The Poseidon Challenge

45. And finally: It is our seafarers to whom we are indebited, it is their dedication and professionalism often in the face of adversity that deserves our whole hearted appreciation. We salute them.

46. Thank you www.intertanko.com