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Ocean Transportation

U.S.-Romania Maritime Agreement

On June 4, 1976, the United States and the Socialist Republic of Romania signed an agreement on maritime transport (TIAS 8254; 27 UST 1415; entered into force June 4, 1976). The agreement was for the purpose of institutionalizing procedures for handling shipping issues which, in the past, were handled on an ad hoc basis. It covers six major areas: facilitating and expediting maritime traffic; establishment of shipping operations representatives in the other's country; status of crews in port; treatment of vessels in distress; reciprocal recognition of seamen and vessel documentation; and participation in direct and cross trades.

The agreement is limited to merchant ships "actually engaged" in commercial shipping. By explicit language, it does not cover warships and fishing vessels, and does not include cargo sharing or cargo pooling provisions. The agreement provides for consultations at the request of either party. The initial term is for three years, with extension for successive terms of three years subject to both parties' approval.

Regarding entry into ports, Article 5 notes the relevant provisions of the 1975 Agreement on Trade Relations (TIAS 8159; 26 UST 2305; entered into force August 3, 1975) and provides for mostfavored-nation treatment of vessels, "except insofar as requirements of national security limit such access." Within ports, vessels are to receive most-favored-nation treatment "except insofar as modified by port security requirements." Because the United States maintains port security measures, a letter was appended to the agreement indicating the measures applicable to Romanian vessels. Romania had no similar requirement.

Article 6, dealing largely with cabotage, provides for the right to engage in passenger and cargo service in direct and cross trades but restricts carriage of cargo between ports of the United States to U.S. vessels in conformity with the requirements of U.S. law. Cargo from a vessel in distress may be temporarily stored without payment of customs.

Matters not specified in the agreement are reserved to each party to apply its national laws and requirements; further, the agreement does not limit the right of either party to take action for the protection of its national interests.

U.S.-U.S.S.R. Maritime Arrangement

Signature of a memorandum by the Federal Maritime Commission

and the Soviet Ministry of Merchant Marine concerning principles to govern participation of Soviet common carriers in the U.S. ocean cargo trades was announced by Karl E. Bakke, Chairman of the Federal Maritime Commission, on July 19, 1976.

The memorandum commits the good offices of the Commission and the Ministry to accomplish two results: (1) Soviet carriers would raise, where necessary, and maintain ocean cargo rates at a level not lower than the lowest rate actually used for the same commodity by any non-Soviet carriers in the particular trade involved; (2) Soviet carriers would actively pursue membership, on equitable terms and conditions for all member carriers, in liner conferences covering the U.S. North Atlantic and Pacific ocean cargo trades.

Federal Maritime Commission (FMC) News Release, July 19, 1976. The text of the memorandum released by the FMC follows:

Having discussed fully and freely matters of mutual interest concerning the liner trades of the Soviet Union and the United States, and

Having agreed upon the importance of a viable liner conference system in maintaining stability in those trades, and

With due regard to the legitimate economic interests of carriers, shippers and consumers that are served by liner conferences in the United States ocean trades, and

With due regard to the long term benefits to commercial relationships between the Soviet Union and the United States that can be realized from stability of ocean cargo rates in those trades,

The parties hereto have mutually agreed to utilize the good offices of their respective agencies to achieve the following:

1. All ocean cargo rates contained in tariffs of Soviet carriers now engaged as independents in the liner trades of the United States shall, as promptly as it is feasible, be adjusted to a level no less than that of the lowest rate in use for the same commodity of any other independent carriers in those trades,

2. Thereafter, prompt action shall be taken, as necessary, to maintain the foregoing relationship between ocean cargo rates of Soviet carriers engaged as independents in the liner trades of the United States and the ocean cargo rates for the same commodity contained in the tariffs of other independent carriers in those trades,

3. Discussions shall promptly be resumed concerning equitable terms and conditions for conference membership of Soviet carriers in the North Atlantic liner trades of the United States, with particular attention to the principle of temporary rate differentials for Soviet carriers in those trades based upon differences in the services offered by Soviet carriers and by other carriers in those trades, such rate differentials to be (a) reasonably related to the degree of differences in such services, and (b) to be promptly eliminated as the services in question reach a reasonable degree of comparability, and

4. Discussions shall promptly be initiated concerning equitable terms and conditions for conference membership of Soviet carriers in the inbound and outbound conferences serving Pacific liner trades of the United States in which the Soviet carriers are not now conference members, with particular attention to the principle of temporary rate differentials for Soviet carriers as set forth in paragraph 3 above.

The parties hereto have also mutually agreed that henceforth there must be closer working relationships between their respective agencies concerning exchange of factual information and policy questions, and that the necessary steps shall be promptly undertaken.

Antitrust Laws

The U.S. Government in August 1975 notified the Governments of Belgium, France, the Federal Republic of Germany, the Netherlands, Sweden, and the United Kingdom, of the intention of the Department of Justice to undertake a civil investigation of ocean carriers in the North Atlantic trade between Europe and the United States. In August 1976 the U.S. Government informed the six governments of its intention to initiate a Grand Jury review in application of U.S. antitrust laws. Subpoenas were subsequently issued to a number of shipping conferences and container lines, calling for the production of documents relating to North Atlantic shipping.

The six Governments in notes of October 12 and 13, 1976, individually expressed their concern at the application of U.S. antitrust laws to ocean shipping, and on October 27, the U.S. Government, in keeping with agreements within the Organization for Cooperation and Economic Development (OECD) on antitrust cooperation, consulted with the six Governments in an effort to describe the scope and objectives of the investigation and review, to the extent permitted by the secrecy requirements of the Civil Investigative Demand statute and the Grand Jury procedure permit. In a note to the several Governments dated December 2, 1976, the United States offered to engage in further consultations in either bilateral or joint formats. The note stated the U.S. position on the matter as follows:

The U.S. position on the application of its laws to international shipping recognizes the fact that the activities of the ocean shipping industry are by their nature international and that the trade of the United States is also the trade of at least one other country. The U.S. Government in no way asserts a right to unilaterally regulate the conduct of ocean carriers providing service to the United States. However, the U.S. Government must insure that conduct of such ocean carriers, which affects U.S. commerce, is not at variance with U.S. legislation.

The U.S. Government does not believe that the application of its antitrust laws, to agreements which the U.S. Federal Maritime Commission has not approved or cannot approve, and which are therefore not exempt from those laws, will hamper the expansion of world trade or the efficient flow of international shipping. Nor should this constitute an interference with the vital interests of the countries whose shipping provides service to the United States. The objective of the U.S. policy, including the antitrust laws, is to insure that shipping services are provided on a sound economic basis. As was emphasized by the United States during the October 27 consultation, the current investigation is in no way aimed at

undermining the conference system or impairing the relationship between conferences and the U.S. regulatory authorities. On the contrary, the investigation would determine whether the integrity of the regulated conference system has been impaired by the implementation of secret agreements.

Dept. of State File No. P76 0183-1143.

Containers

On September 15, 1976, the Senate gave its advice and consent to ratification of the Customs Convention on Containers, 1972, and the International Convention for Safe Containers, both signed at Geneva on December 5, 1972 (Senate Executive X, 93d Congress, 1st Session). The President signed instruments of ratification of the two conventions on October 8, 1976, but deposit of the U.S. ratifications awaits enactment of implementing legislation.

The Customs Convention on Containers, 1972, is designed to supersede and update the Customs Convention on Containers, 1956 (TIAS 6632; 20 UST 301; entered into force for the United States March 3, 1969). The provisions of the 1956 convention became obsolete or inadequate as a result of the considerable increase in number of containers used in international traffic and the need both for simplifying customs formalities and for facilitating container transport. The new convention provides for: (1) the temporary importation, free of import duties and taxes, and free of import prohibitions and restrictions, of containers, either loaded or empty, their accessories and equipment, and component parts for the repair of temporarily admitted containers; (2) the use of temporarily imported containers in internal transport operations under specified conditions; (3) the acceptance of containers by the customs administration of each party to the convention which meet the specifications in, and are approved and documented or marked in accordance with, the procedures set forth in the technical annexes to the convention; and (4) the approval of containers for transport under customs seal. The convention entered into force on December 6, 1975, for countries which had deposited instruments of ratification or other approval six months prior to that date.

The International Convention for Safe Containers was motivated by concern over the adverse impact that unilateral construction requirements would have on the facilitation of containerization. The convention signals agreement by states parties to it that such safety requirements be developed on a common basis. The convention specifies the structural requirements which transport containers must meet to assure that they are safe. It does not include the stowage

of goods in the containers, the handling of containers at interface points, or the actual transport of containers on vehicles of any mode. Its requirements relate to all containers above a specified size except those designed exclusively for air transport. The convention lays down specific engineering requirements which all affected containers must meet and provides a framework for an administrative system to assure compliance.

Each party to the safety convention must designate an appropriate authority to be responsible for implementation of effective procedures for testing, inspection, approval, and periodic reexamination of containers. Testing, inspection, and approval may be entrusted to nongovernmental organizations. Parties to the convention are required to recognize approvals granted under the terms of the convention, but if there are clear grounds for believing that the condition of a container creates an obvious risk to safety, they may act to ensure that it is restored to safe condition before continuing in service. The convention will enter into force on September 6, 1977, for countries which by September 6, 1976, had deposited instruments of ratification or other approval.

Automotive Traffic

Glenn E. Shealey of the Office of the Assistant Legal Adviser for European Affairs, Department of State, responded in a letter of July 26, 1976, to an inquiry from the Embassy of Switzerland in Washington concerning difficulties encountered by Swiss citizens entering Massachusetts with respect to the recognition of their Swiss driver's licenses, despite the fact that Switzerland accords privileges to Massachusetts drivers for up to one year.

Mr. Shealey noted that the regulation of highways in the United States is left to individual States and that four StatesMassachusetts, Tennessee, West Virginia, and New Mexico-do not technically recognize Swiss driver's licenses. Inasmuch Switzerland was not a party to the 1949 Convention on Road Traffic (TIAS 2487; 3 UST 3008; entered into force for the United States March 26, 1952), Massachusetts was requiring Swiss citizens to obtain a Massachusetts license to drive in the State. Mr. Shealey's letter noted, however, that the Registrar of Motor Vehicles of Massachusetts was empowered to enter into arrangements with respect to road traffic matters, and could agree to any mutually satisfactory arrangement with the Swiss Government within constitutional limits.

Dept. of State File No. P76 0119-601.

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