Policy on state aid

This law supports competition by ensuring the non-restriction of access to cargoes among shipping companies. This means that state governments or port authorities as well as shipping organisations or individual liners cannot prevent or refuse other shipping firms from getting passengers or taking cargo for shipment if the activity does not fall under existing exemptions or limitations. By ensuring free access, many shipping lines can participate in service delivery that in turn intensifies competition. Main Features of European Community Shipping Policies

The shipping laws also provide the framework for the shipping policies in the European Community. The shipping policies in the EC comprise its response to the global competition in the shipping industry as well as the enforcement of its jurisdictional regulatory rights towards shipping companies based and operating in the EC as well as non-EC based shipping companies providing shipping services with the EC member countries . First policy characteristic is its federal but flexible approach to shipping .

The federal aspect finds reflection in the implementation of uniform shipping regulations for the EC member states. This results to the pooling of the bargaining power of the more than 350 million potential clients of the shipping industry. Prior to the enactment of uniform regulations, the member states, acting individually, coped with dumping as well restrictive cargoes by implementing duties from shipping lines experiencing benefits from implementing unfair competitive practices.

While these served the intended purpose for the individual states, this also hampered the ability of the EC to engage in trade negotiations as a block to forward common interests . However, the federal approach is flexible in particular areas. An example is the diversified stand on state aid to the shipping industry. The shipping capabilities of the different member states as well as their need for state aid differ resulting to the irrationality of implementing a unified policy on state aid.

Implementing a unified policy on state aid to the shipping industry could cause competitive problems within the EC. As such, the allocation of state aid to the shipping industries of the member states should depend on contextual needs. Second policy characteristic is the divisional approach to shipping by implementing different regulations for shipping companies operating in the EC and regulations influencing the shipping practices of other countries implying extraterritorial application .

The regulations pertaining to international regulations target flag discrimination and cargo reservation practices. Although, these practices could occur with the consent of other state governments, the EC exercises its influence through the shipping liners based in these states . The purpose of the divisional approach is not to interfere in the regulatory affairs of other states or the private affairs of business firms but to establish bargaining chips that would influence shipping companies to operate in a fair manner and within a competitive industry environment.