Maritime Law: Harnessing the potentials of a Relaxed Cabotage Regime in the Nigerian Shipping Industry
"Cabotage should not only be restricted to the few popular ports we have presently. Our dry ports should also be maximised. Our inland waterways should also be dredged. All ports under construction and renovation should be fixed immediately and our experts in diaspora should be engaged, for the construction and maintenance of vessels to effectively serve our tonnage needs."
Cabotage, according to the perception of the term by Nigerian law, is the transport of goods from port to port, within a country by a vessel registered in another country. Cabotage laws is a set of laws made by a government of a country to prevent or limit the transport of goods or people within the country’s borders by foreign vehicles, ships or aircraft.
Cabotage rights refer to the rights granted foreigners and foreign vessels to participate in the transportation of goods and persons in another country. It refers to the rights granted by a country to foreign vessels to carry on domestic waterborne trade or domestic shipping within the territorial limits of that nation.
While some countries permit cabotage and grant rights to that effect, some other countries do not allow it; they prohibit cabotage rights with strict sanctions attached. These prohibitions have been stated to be for economic, political, geo-cultural or security reasons. One of such countries is Nigeria, by virtue of her cabotage regime (name the law itself).
It is imperative that where the country’s shipping industry lacks the required coastal ships, cabotage restrictions do not favour such a nation, and the protectionist policy would at best, best be impracticable.
It is trite to mention that cabotage is not limited to the shipping industry, but it applies to aviation, rail and road transport, from the modern definition of the word, which has been expanded to include these three modes of transport.
For Air Cabotage, the extant legal regime governing it is the Convention on International Civil Aviation (Chicago Convention of 1944). This convention grants in its Article 7 that member states shall reserve total rights over its air transport system and grant cabotage rights to any state it chooses. However, there is a qualification to this power, so as to negate discriminatory grant of cabotage rights by such countries, such that the grantor is bound to grant the same rights it grants to another state to a third-party state which demands cabotage rights from the grantor. Many writers have expressed their dissatisfaction in this regard, as it seems to limit the rights available to such states as a sovereign state. I’m of the opinion that this is not correct. By agreeing to be a part of this arrangement, all member states should accept the conditions attached to the said Article 7, even if it doesn’t favour their sovereignty. They are seen to have already waived such rights by being a part of the Chicago convention. If they are not comfortable with it, there are other arrangements that could suit them, but that is not our focus in this work.
Cabotage regimes could be strict or liberalized, based on the “objectives, national interests, local situations” and perceived security implications of such cabotage policy to the state in question.
The United States of America, just like us, operates a strict regime, with its laws prohibiting the presence of foreign vessels in its waterways; for mainly security reasons.
Most Asian countries are said to operate a relaxed/liberalized cabotage regime so as to accommodate foreign involvement in their coastal trade.
For some other countries, they operate a liberalized regime, though subject to some conditions, e.g. lack of vessels registered in the country, or some other conditions as provided by the laws of such states. The level of liberalization varies from state to state.
For Nigeria, the words of our statute, Coastal and Inland Shipping (Cabotage) Act No 5 of 2003, Laws of the Federation of Nigeria, show that our cabotage policy leans more towards the side of a strict cabotage regime, and prohibits the presence of vessels not wholly owned by Nigerian citizens in its water ways; though with a provision for waivers and conditions precedent for granting same. However, it’s audible to the deaf and visible to bind that such a cabotage regime is at best impracticable in Nigeria, which is why the implementation of the policy is not easily feasible. We lack seaworthy vessels and the political will to embark on such adventure, as we are currently in need of foreign investment. In fact, we are not yet ready for the full implementation of such, for the damaging and crippling effect it might have on our economy. However, the provisions in the Act which provide for waiver and how it should be granted have given a lot of leeway to the government to allow for some compromise, should the policy become impracticable for whatever reason.
Findings have shown that a strict cabotage regime is no good to national economy, even that of an economically fortified country like the United States of America[1]. The monopolistic power of national vessels would invariably take away the possibility of transporting at lower costs from foreigners who are willing to lower the cost, and as such there has been a nagging clamour by citizens of the United States of America for a liberalized cabotage regime. This shows that even countries with the most stable of economies do feel the negative impact of a strict cabotage regime on its economy. On the flip side, it appears to be a lesser evil when compared to the demons that afflict liberalized cabotage policy in countries that are currently unable to handle it properly. A clear example of this is Nigeria, prior to the Act. The maritime industry was run aground during this period, and the industry is yet to recover from it, nearly two decades after. We still remain deficient financially, technologically, infrastructurally and other aspects. We must at least regain our balance before speaking of switching back to a liberal policy.
Nigeria, with the state of its economy should make and implement policies which favour the growth of its economy rather than sabotage it. Implementing a strict cabotage regime implies that there are vessels on ground for foreigners to hire, even if it is at exorbitant rates. The economic implication of the hiring rates/fees aside, Nigerian shipping industry cannot sustain a fully strict policy, as it doesn’t even have nearly the number of ships required to serve such purpose, hence the reluctance to implement the policy.
However, the Nigerian cabotage policy, seems to toe the line of indecision, because even though it seems strict on the surface, the words contained in sections 56, 2, 10, and 16 of the Act, when read together reflects a “liberal protectionist policy” which means that though it is strict on the face of it, it allows some space for undeserved grace, ultimately for the protection of our shipping industry from domination and death, by foreign players.
The downside to this is the fear that it could encourage corruption and discriminatory permission of foreign vessels, because of the benefits to be enjoyed by the pockets of serving government officials in exchange for discretionary waivers. This will in turn, scare away foreign investors from the Nigerian shipping industry.
Nigeria's economy and national security, requires some guidance, conducive environment and protection from foreign competition so as to be nurtured into maturity and given room to develop through its acquisition and building of the necessary capacities to become sufficiently commercially viable and strong. Thus, the local shipping industry will be able to control and become very strong in domestic shipping before venturing into regional or international shipping where it will then be able to withstand competition from the highly subsidized foreign ships in international shipping.[2] However, our economy has always suffered in the areas where there is no competition, and as such, it is only natural for those who are given the inland waters to transact business, without any stiff competition to relax and transact business lackadaisically, instead of expanding and adding value to the industry as a whole. Thus, this brings a counter-productive result which was far from what the country had in mind to achieve by putting up the policy.
In as much as going back to a fully liberalized cabotage system is not advised, concessions are advised for other west African states who are members of ECOWAS. As well, strict accountability should be demanded statutorily from regulatory agencies as regards the administration of our cabotage policy, while we still operate with the existing policy.
Cabotage should not only be restricted to the few popular ports we have presently. Our dry ports should also be maximised. Our inland waterways should also be dredged. All ports under construction and renovation should be fixed immediately and our experts in diaspora should be engaged, for the construction and maintenance of vessels to effectively serve our tonnage needs.
[1] T Grennes, ‘An Economic Analysis of the Jones Act’ (2017) Mercatus Research, Mercatus Center at George Mason University, 45.
[2] Mr. Michael Igbokwe “THE NEW CABOTAGE ACT - ITS INTENDED EFFECT ON THE LOCAL SHIPPING INDUSTRY.” Presented at the Annual Maritime Seminar of the Nigerian Maritime Law Association held on 13th and 14th May, 2003.
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