Shipping emissions : regulatory complexity and coordination problems

“There’s one issue that will define the contours of this century more

dramatically than any other, and that is the urgent threat of a changing

climate.”

Abstract

The emissions of the international maritime transport sector are substantial, and they create problems as diminishing air quality and global warming. The increased attention to maritime emissions and their harm to the environment and our health have led to a proliferation of institutional arrangements focusing on mitigating this problem. These new rules, organizations, implementation mechanisms, operational activities and financing arrangements have, one could say, been carved out from a wider system of transnational environmental governance. This system, which will be analysed using the theoretical framework of regime complexes, has been characterized as a highly complex environment that is “fragmented, polycentric and decentralized”.

While a lot of research has been done on regime complexes as a static phenomenon, his has been lesser the case for emerging regime complexes in the context of institutional change. To gain a firmer understanding of the empirical case of maritime emission regulations and to deepen scientific knowledge on the coordination problems in the context of institutional change; the objective of this master’s thesis is to answer the following research question: “What coordination problems does the emerging regime complex on maritime emissions face and is there a need for hierarchical authority within this system?” Empirical results gained from interviews help by answering this question.

The analysis shows that the process that changed the institutional landscape into its current form has led to new coordination problems. Institutional change in the regulatory sector of shipping emissions has occurred in a bottom up manner and new elements have been added to the existing institutional landscape on different levels. The coordination problems that came to the surface during this process are related to unintended consequenses of new institutions, the compromises that were needed to create new institutions, conflicting interests of stakeholders and changing contexts over time that can cause, reinterpretation of institutions.

Preface

Before you lies the master’s thesis ‘Shipping Emissions: Regulatory Complexity and Coordination Problems’, written in the context of the research project ‘Global Environmental Politics and Governance in Theory and Practice’. I was part of this research project in order to fulfil the graduation requirements of the Political Science master’s program, which I followed with a specialization in International Relations. From start to finish, I have been working on this thesis between February and Juny 2017.

My motivation to write this thesis started with my strong interest in sustainability challenges and the way they are governed by various stakeholders. During the process of regulating climate change, power relations strongly steer the ways in which sustainability challenges are addressed. This is also definitely the case in the maritime transport sector, which I became familiar to by the stories told by friends working in this sector. This was the reason why I decided to focus my research of an important challenge within the shipping sector: regulating its emissions. While in this thesis I am often writing about coordination problems between different institutions that regulate this issue, I am convinced that every problem can be bend into new opportunies. I hope this research will contribute to this ‘bending’.

I would like to thank my supervisor Robin Pistorius for guiding me through the - sometimes frustrating process of enacting qualitative research. He gave me new insights I would never have thought of myself and helped me to give this thesis a clear structure. Furthermore, I want to thank all respondents that were willing to cooperate to this research, without them I would not have been able to conduct my analysis. I also want to thank my friends from the Maritime Academy Willem Barentsz at Terschelling for giving me unique insights in this sector that has often been considered to be quite hard to enter by outsiders. Lastly I want to thank my boyfriend, family and friends for supporting me throughout the whole process of obtaining my master’s degree.

I hope you enjoy your reading. Annemieke Feikens

Abbreviations

AWG-LCA Ad Hoc Working Group on Long-term Cooperative Action under the Convention

CBDR Common But Differentiated Responsibilities COP Conference of the Party

EC European Community

ECA Emission Control Area

EEDI Energy Efficiency Design Index ETS Emissions Trading System

EU European Union

EU-ETS European Union Emission Trading System FOC Flags of Convenience

GHG Greenhouse Gas

IMO International Maritime Organization

IPCC Intergovernmental Panel on Climate Change LNG Liquefied Natural Gas

LOSC United Nations Convention on the Law of the Sea MBM Market-Based Measure

MEPC Marine Environment Protection Committee MOU Memorandum of Understanding

MRV Measurement, Reporting and Verification NECA Nitrogen Emission Control Area

NMFT No More Favourable Treatment NGO Non-Governmental Organisation NOx Nitrogen Oxides

OECD Organisation for Economic Co-operation and Development SBSTA Subsidiary Body for Scientific and Technological Advice SECA Sulphur Emission Control Area

SEEMP Ship Energy Efficiency Management Plan

SOx Sulphur Oxides

PM Particulate Matter

UNEP United Nations Environment Programme

UNFCCC United Nation Framework Convention on Climate Change WMO World Meteorological Organization

Table of content

Abstract ... 2

Preface ... 3

Abbreviations ... 4

1. Introduction: a dynamic perspective on a complex regulatory environment .. 7

1.1 Background ... 7

1.2 Introduction to case study ... 8

1.3 Research questions ... 9

1.4 Scientific and societal relevance ... 9

1.5 Thesis outline ... 10

2. Theoretical Framework: connecting the concepts of regime complexes and institutional change ... 12

2.1 Introduction ... 12

2.2 Institutional coordination challenges ... 12

2.3 Recomposing environmental regime complexes ... 13

2.3.1 The integration-fragmentation axis ... 14

2.3.2 Role of hegemony ... 15

2.4 Institutional change ... 16

2.5 Regime shifting ... 20

3. Methodological approach ... 22

3.1 Introduction ... 22

3.2 Case selection: North Sea maritime emission regime complex ... 22

3.2.1 Functional definition ... 22

3.2.2 Spatial definition ... 23

3.3 Operationalization ... 23

3.4 Data ... 24

4. Empirical context: emissions within the North Sea maritime transport sector ... 26

4.1 Environmental impact of shipping emissions and related technological possibilities ... 26

4.2 Economical aspects of mitigating shipping emissions ... 28

4.3 Jurisdictional context of maritime transport sector ... 30

5. Regulations on shipping emissions as a regime complex ... 33

5.1 Elements of the institutional landscape ... 33

5.1.2 UN institutions ... 34

5.1.2 EU ... 34

5.1.3 National level ... 35

5.1.4 Port state control/Paris Memorandum of Understanding ... 36

5.1.5 Port initiatives ... 37

5.2 Addressing the institutional design as a regime complex ... 38

6. The evolution of international shipping emission regulations ... 39

6.1 The emergence of the issue ... 39

6.2 Regime shifting actors ... 40

6.3 Conclusions ... 42

7. Coordination problems connected to institutional change ... 44

7.1 Regional (EU) vs. global interests ... 44

7.2 Problems regarding the SECA ... 47

7.4 Global climate change regime vs. IMO treaty instruments ... 47

7.5 Conclusions ... 48

8. Conclusions ... 50

8.1 Reflection on research questions ... 50

8.2 Reflection on method ... 51

8.3 Generalising outcomes ... 52

8.4 Theoretical implications and future research ... 52

8.5 Policy recommendations ... 52

References ... 54

Appendices ... 59

I Interview Participants ... 59

II Interview Guide (Dutch) ... 61

1. Introduction: a dynamic perspective on a

complex regulatory environment

1.1 Background

The emissions of the international maritime transport sector are substantial, and they create problems as diminishing air quality and global warming. Not only greenhouse gasses are threatening our world. The increased concentrations of ultrafine particulate matter (PM) are considered to be an important threat to public health: according to Kalli et al. (2013, p. 130) about 49,500 deaths in Europe in 2000 can be related to shipping exhaust emissions and for a large part to PM. Also sulphur and nitrogen oxides can have bad impact on our environment (Kalli et al., 2013). In the maritime transport sector, especially the reduction of sulphur emissions has been given emphasis. This is because ships often use the heaviest fuel oil, which remains after the distillation process and contains high concentrations of sulphur. This fuel is much more polluting than the fuels used in cars, plains and other means of transport.

The increased attention to maritime sulphur emissions and their harm to the environment and our health have led to a proliferation of institutional arrangements focusing on mitigating this problem. These new rules, organizations, implementation mechanisms, operational activities and financing arrangements have, one could say, been carved out from a wider system of transnational environmental governance. This system, which has been analysed using the theoretical framework of regime complexes, has been characterized as a highly complex environment (Keohane & Victor, 2011), which is “fragmented, polycentric and decentralized” (Abbott, 2012, p. 571). Others point to the importance of a strong, hegemonic actor that can serve as an orchestrator.

Regime complexes are not static phenomena; they are always evolving, because of both internal as external incentives. Existing theories of regime complexes often do not spend a lot of attention to this facet of the concept (see, for example, Keohane & Victor, 2011). In the case of the regime complex of maritime emissions institutional change is very apparent; it is still a young and developing regime complex and the ask for stronger regulation has been heard very often. In this context of institutional change, new coordination problems come to the surface. These coordination problems are related to institutional change for various reasons; one of them is that policy makers cannot forsee all future consequenses of their decesions (Streeck & Thelen, 2005).

While a lot of research has been done on existing regime complexes and interaction between different institutional arrangements, this has been lesser the case for the emergence of recomposed regime complexes and the coordination problems that occur in this process. This research on the emergence of the maritime regime complex

that regulates emissions can be used as a case to develop further understanding on a wider trend of recomposing environmental regime complexes and the challenges that become apparent in this process.

The central argument of this thesis is that the institutions that try to regulate emissions from the maritime transport sector form a regime complex as defined by Keohane & Victor. Furthermore, it is argued that the process of conversion, or the attachment of new elements to existing institutions, is the main type of institutional change that made the regime complex look like its current form. This type of institutional change can, according to Streeck and Thelen (2005), lead to certain inter-institutional dynamics, which can be observed empirically as coordination problems in the regime complex.

1.2 Introduction to case study

The process to regulate the reduction of emissions from international shipping is, according to Shi (2016), comprehensive and controversial. It cuts across international maritime law, international environmental law and international trade law and involves political, historical, economic and technical considerations. Therefore, it is necessary to find political compromises and to develop innovative regulatory efforts.

The European SECA area, consisting of the North Sea, Baltic Sea and the English Channel, is an area that stands out when focusing on policy complexity and density. In this region, different levels of governance interplay without being ordered by hierarchy. The IMO, an institutional body within the United nations that can be considered as the overarching organization regulating the international maritime sector, created annex VI to the International Convention for the Prevention of Pollution From Ships (MARPOL) in which the permitted sulphur content of marine fuels have been established. Besides this, so-called Sulphur Emission Control Areas (SECAs) have been introduced by the IMO with the goal to reduce air pollution from the shipping sector in dense and sensitive areas. The EU translated this in the European Sulphur Directive (2012/33/EU) and has implemented its own framework to regulate GHG emissions. The conventions and directives are converted into national laws and governments often appoint different control agencies in order to enforce these laws. (Lister et al., 2015)

GHG emissions from the sector are currently not regulated by the United Nations Framework Convention on Climate Change (the Kyoto Protocol). Also in the most recent COPs no new regulations were proposed that cover shipping emissions. Inclusion in the Kyoto Protocol is often considered very important because it would address the overall obligations of national governments with regard to the reduction of GHG emissions. However, it has proved too complex to include the emissions of the sector in the protocol because of its very international nature. The emissions from shipping cannot be the responsibility of a specific country. Because of these difficulties, the IMO has been

appointed to create sector specific regulation. Two policy mechanisms set out by the IMO currently tackle GHG emissions: the Energy Efficiency Design Index (EEDI) and the Ship Energy Efficiency Management Plan (SEEMP). Both mechanisms are mandatory regulations and came into effect on 1 January 2013. However, the EU has set specific targets with regard to GHG emissions and is currently discussing various policy development mechanisms. For emissions other than CO2, the EU is generally following the standards set by the IMO. (Lister et al., 2015)

1.3 Research questions

To gain a firmer understanding of the this empirical case and to deepen scientific knowledge on dynamics within regime complexes and the related coordination problems; the objectives of this master thesis are (1) to determine whether the institutional landscape that regulates shipping emissions can indeed be defined as a regime complex; (2) to identify what types of institutional change are shaping this governance structure and; (3) to connect observed coordination problems to these dynamics of institutional change.

The research question that will be used to fulfil the objectives of these objectives:

“Can the institutions that govern shipping emissions be characterized as a regime complex and how is institutional change shaping the coordination problems within this institutional landscape?”

To answer this research question, four sub questions will be used:

1. What are the main institutional elements that regulate maritime shipping emissions and do these institutions fulfil the definition of a regime complex?

2. How could the dynamics within the regime complex on maritime emissions be characterized?

3. What coordination problems can be observed within this regime complex and how could these problems be connected to processes of institutional change?

1.4 Scientific and societal relevance

In the coming decades global concerns about environmental problems and climate change are expected to increase. To mitigate these ‘new’ problems, new regulatory measures must be taken. Since these measures are increasingly international in nature, in is often very complex to create new regulations that are fully integrated and all encompassing. This is the reason why multiple interconnected and overlapping institutions (regime complexes) are expected to be more common in the future. When new regime complexes are formed, new institutional elements will be added to the

existing regulatory environment. This process can take place along differing paths, which will determine the empirical outcomes of institutional arrangements.

This research can be situated in the scientific gap between theories of the regime complex of Keohane and Victor (2011) and theories of institutional change of Streeck and Thelen (2005). To fill this gap, this thesis tries to connect the concepts of the regime complex and institutional change more closely by applying these theories to the empirical context of regulations on shipping emissions. The outcome of institutional change can be identified using empirical data on coordination problems in the regulatory sector. In other words, this research considers coordination problems as the visible outcome of institutional change that forms a regime complex.

Besides filling a theoretical gap, this research can contribute to societal challenges. After connecting the coordination problems that are complicating the regulation of shipping emissions to the theoretical concepts of regime complexes and institutional change, something can be said about the underlying dynamics that cause these problems. Thus, based on the outcomes of this research, it should be easier to elaborate on steering these dynamics so that more effective policies can be created. For this reason, some policy recommendations will be found in the conclusion of this thesis.

1.5 Thesis outline

This thesis will, in Chapter two, start off with a consideration of existing theoretical concepts that are important for placing the empirical case in a broader scientific debate. In short, this chapter unfolds around three theoretical concepts: coordination problems, the regime complex and institutional change. It is argued that, in order to properly declare the observed coordination problems in a regime complex, it is necessary to add the factor of institutional change to the analysis.

Then, in Chapter three, it is set out how the theoretical concepts can be applied to the empirical case of the regulation of shipping emissions in the North Sea. To this end, a sectorial and geographical definition is made in order to create a clear demarcation of the research topic. Furthermore, this chapter sets out how data is gathered and how this data will be used to answer the main- and sub questions. Lastly, this chapter contains a conceptual model in order to clearly show how the theoretical concepts are connected with this research.

Regulating the maritime transport sector is fundamentally different in nature from regulating other sectors. This is the reason why an entire chapter is dedicated to the environmental, technical, economical and jurisdictional aspects of the regulatory sector of the maritime transport industry that policy makers face. This chapter therefore serves as the context in which the dynamics within the regime complex need to be placed.

In Chapter five it is argued why the institutions that regulate shipping emissions can be considered as a regime complex. To this end, the different institutions and their

policies to regulate this sector are been set out. This information will be compared with the definition of a regime complex of Keohane and Victor (2011), to determine whether the institutional landscape indeed meets this definition.

Following on this, Chapter six considers the processes that formed the regime complex into its current shape. The issue of regulating shipping emissions is still relatively young and has passed through a fast evolution. These developments will be analysed using the tools of institutional change as set out by Streeck & Thelen (2005).

Building further on the concepts of institutional change, coordination problems that came up in the interviews and secondary literature will be to the results of institutional change connected in Chapter seven. Different types of institutional change lead to different outcomes. Therefore, the concept of regime complexes alone cannot fully explain the coordination problems and by using the dimension of institutional change, these problems will be analysed in a more dynamic framework.

In the final chapter, overall conclusions will be made and the main- and sub questions will be answered. Second, this chapter will reflect on the used methods and their usefulness for achieving the objects of this thesis. Third, it will be considered if it is possible to make more general statements about the role of institutional change in regime complexes that transcend the maritime transport sector and the North Sea area. Fourth, this research can lead to theoretical implications in the sense that new ‘gaps’ come to the surface. To fill these gaps, recommendations for further research will be done. This thesis will end with some concrete policy actions that can be taken to make progress in regulating this important issue of shipping emissions.

2. Theoretical Framework: connecting the concepts

of regime complexes and institutional change

2.1 Introduction

In order to place the institutions on maritime emissions in a broader theoretical debate, knowledge of the climate change regime complex will be used. These theories can tell us more about the integration-fragmentation axis on which regime complexes can be placed, the role of nested or overlapping institutions and the coordination problems that are prevailing in these regulatory arrangements. However, since the regulatory landscape for the maritime transport sector can be considered as a fast developing regime complex that overlaps with the broader regime complex on climate change it is important to connect theory about regime complexes to theories of institutional change. Especially work of Streeck & Thelen (2005) is very useful in this context.

In order to establish a solid theoretical framework, this chapter will first discuss the phenomenon of inter-institutional coordination problems, then it will follow with a short reprise of regime complex models and then the concept of institutional change will serve as a supplement to the theory of regime complexes to explain the origins of prevailing coordination problems within the regulatory environment.

2.2 Institutional coordination challenges

As Freeman & Rossi (2011) state, interagency coordination will be one of the central challenges of modern governance. Instances of overlap and fragmentation between institutions are not rare or isolated. The coordination problems that occur in the regime complex on maritime emissions can be considered as the visible result of the process of institutional change. To have a theoretical outlook of what kind of coordination problems could occur in the maritime emissions regime complex, the work of Shaffer & Pollack (2009) is used to describe the origins of institutional coordination challenges. Furthermore, different literature sources will be used that tell something about coordination problems in the broader climate change regime complex. Especially Keohane & Victor (2011) have written extensively about the influence of specific aspects of the climate change problem on governance practises (See box 1).

Shaffer & Pollack (2009, p. 727) argue that “the harmonious, complementary interaction of hard- and soft law approaches to international cooperation relies on a hitherto unspecified set of scope conditions, including, in particular, a low level of distributional conflict among the players”. They give four different reasons why the interaction between various institutions can lead to challenges in which the institutions act as antagonists. First, the importance of governmental and intergovernmental power

is, according to Shaffer & Pollack (2009) often underestimated in this context. Secondly, they argue that distributional conflicts frequently characterize international cooperation. Various players often have strongly differing preferences over cooperative outcomes, like international regulations and standards, and each player will try to export its interests and preferences to the cost of adjustment of other players. Third, they mention the creation of ‘strategic inconsistency’ in which actors create new institutional arrangements to make forum shopping possible. Fourth, it is stated that implementation challenges are setting off recursive cycles of international law making. As a result of institutional complexity, different institutions are sometimes being used as complements and sometimes as antagonists. (Shaffer & Pollack, 2009)

Coordination problems are seldom caused by just one of these factors. Indeed, often combinations of these aspects interplay with the characteristics of the policy-area resulting in a wide array of governance challenges. Furthermore, the existence of a regime complex itself is, according to Keohane & Victor (2011) a result of uncoordinated efforts to regulate a certain issue. Thus, a regime complex will, in its very existence, almost unavoidable lead to the presence of coordination problems between various regimes.

What also should be added is that, although coordination problems related to regime complexes seem hard to overcome, regime complexes can also offer some significant advantages. Keohane & Victor (2011) state that very focused and decentralized governance activities can have great impact, but are not always politically realistic in the context of international and global problems and differing interests. Besides this, their research shows that that regime complexes are more dynamic in nature and offer greater flexibility and adaptability. According to Freeman & Rossi (2011), who extensively researched interagency coordination in ‘shared regulatory spaces’, overlapping and fragmented institutions can provide a form of insurance against a single agency’s failure.

2.3 Recomposing environmental regime complexes

The concept of regime complexes, initially introduced by Raustiala and Victor (2004) contributes to useful insights in the context of transnational governance. The concept has often been used to characterize and analyse transnational environmental governance and focuses, in contrast with other theoretical lenses that analyse individual regimes, on complex sets of institutions and the interactions between them. Therefore, the attention for regime complexes can be seen as part of a broader trend in which transnational governance is conceptualized in a more integrated way. Keohane and Victor (2011) consider the need to address distinct problems within the general area of climate change as a major factor leading to the multiplicity of interstate institutions. Since international

as a tool will be of increasing relevance in analysing the way in which environmental issues are governed (Abbott, 2012).

2.3.1 The integration-fragmentation axis

Raustiala & Victor (2004) propose to classify regime complexes along the continuum between very loose arrangements, like for example the different elemental regimes that govern various forms of air pollution related to the consumption of energy, and more tightly bound arrangements, like for example the regime complex that regulates the release of chemicals and pesticides in the environment. Furthermore, the regime complex itself can be placed in the middle of a broader continuum of governance arrangements between fully integrated and highly fragmented arrangements. A fully integrated, comprehensive institution is often focused on just one legal instrument to regulate an issue. Highly fragmented governance arrangements, on the other hand, are functioning very or completely autonomous and mostly don’t overlap in competences. In other words, their authority is strictly sectorial or geographical separated. A regime complex can be placed in the middle and can be characterized as a loosely coupled system and lacking any overall architecture. Furthermore, Abbott (2012) states that, according to the broader form of regime complex, institutional overlap is not necessarily the case in regime complexes. (Raustiala & Victor, 2004)

“We see at least four distinct cooperation problems under the broad banner of “climate change”:

1. The hardest and most central problem is coordination of emission regulations.

2. Another problem is compensation—such as financial transfers—for countries that are unwilling or unable to adopt emission controls. For example, essentially all developing countries at the Kyoto talks were unwilling to agree on measures limiting emissions in the absence of payments through mechanisms such as the CDM.

3. A third problem is coordinating efforts to brace for a changing climate, principally through adaptation, but possibly with geoengineering. With geoengineering, action by one or a few actors may be too tempting and need to be prevented, which makes the cooperation challenge the opposite of collective action to control emissions. That is, the challenge in geoengineering is how to make it more difficult rather than easier to act.

4. The final cooperation problem is coordination of common scientific assessments to increase the public good of shared knowledge about the causes and consequences of climate change. (International cooperation is also required to promote and coordinate investments in new technologies, which also have public good characteristics. Most carbon-related technologies are traded in a global marketplace and, thus, the well-known market failures leading to under- investment in research and development are increasingly global in scope.)”

Box 1 Coordination problems within the climate change regime complex (Keohane & Victor, 2011, p. 13)

2.3.2 Role of hegemony

Once a regime complex has been established and recognized, it may be politically feasible to tighten the links between the elements of the complex to create a higher level of integration and enhance the coverage of the governance system. Especially in a situation in which tensions are rising because of disappointing results, but power relations make the creation of a fully integrated governance system unreachable, this could be a promising means to increase effectiveness. (Young, 2013)

The presence of a strong actor in a regime complex can lead to a situation that has been referred to as ‘nesting’ by Alter & Meunier (2006). When regional or issue-specific institutions are nested, it means that they are part of larger multinational framework that involve multiple states or issues, often compared with Russian dolls. In the case of nesting, institutions overlap in authority, but when a subsumed regime enacts a conflicting policy it means a violation of the more encompassing regime. In other cases, regimes do overlap, but have multiple institutional commitments that are not hierarchal ordered. In this overlapping context, a conflict between different policies does not per se mean that one rule is a violation to the other (see figure 1). In practice, Alter & Meunier (2006) show, it is seldom the case that a universally accepted hierarchy of international institutions will solve policy conflicts. Thus, a nested regime complex can be as conflictual as those that overlapping complexes. (Alter & Meunier, 2006)

According to Abbott (2012) overlapping regimes begin to overlap when regimes that operate at governance issues that before have been seen as distinct from each other, both start to affect the same issue. For example, as set out by Raustiala and Victor (2004), biodiversity and trade have for long time been considered as having no institutional overlap, until problems relating to plant genetic resources came up to the agendas. Likewise, the connection between climate change and the maritime sector have for a long time been neglected in regulatory frameworks, like the Kyoto Protocol (Lister et al., 2015). In the case of overlapping regimes, inconsistencies can, according to Raustiala and Victor (2004) decrease the effectivity of policies and encourage patterns of regime shifting and forum shopping. Furthermore, they state that inconsistencies can create difficulties among states while interpreting and implementing international rules.

Alter & Meunier (2006) distilled two categories of strategic approaches to resolve conflicts across rules of overlapping institutions. The first one is differentiation, in which actors attempt to separate the realms of different regimes. This can be done both at the international and the international level. As a second approach, used when differentiations fails, it is assumed that a clear hierarchy becomes necessary. At the domestic level, authority can be legally divided into separated jurisdictions. The international context, on the other hand, is characterized by anarchy, which implicates that there is no agreement on the final authority that has the competence to resolve

conflicts between different regimes and policies. Thus, it seems to be an impossible task to create a strict hierarchy in the context of international anarchy. (Alter & Meunier, 2006)

The phenomenon of ‘forum shopping’, on the international level creates, according to Alter & Meunier (2006, p. 365) a dilemma for policy-makers:”they try to avoid being gamed by forum shoppers, while keeping their options open by adopting strategies to maximize international bargaining leverage”. In some cases, they state policy-makers ask for the judgement of judicial decision makers to define which policy has the most authority. However, judges are often hesitant because they are aware that other international institutions may contradict those judgements and know that the international nature of anarchy makes it very hard to say something about the hierarchy of competing rules. (Alter & Meunier, 2006)

2.4 Institutional change

To analyse a regime complex in its contemporary state, it is necessary to have knowledge about its precedents and the processes that are continuously changing it over time. The way in which new elements are added to an existing institutional environment, can give new insights about the coordination challenges that are prevailing in regime complexes. While regime complexes are, whether or not consciously, often described as static phenomena, theoretical work of Rautiala & Victor (2004), Streeck & Thelen (2005)

Figure 1 Examples of nested and overlapping institutions (Adjusted from Alter & Meunier, 2006)

and Helfer (2004) can help to describe regime complexes and their coordination challenges as dynamic and changing instead of static.

The process of regime formation has in existing literature often implicitly been considered as starting with an institutional clean slate. In reality, however, it is seldom the case that negotiators have got the task to create a completely new regime from scratch and frequently existing arrangements and rules are already in place. Thus, with the creation of ‘new’ regimes, these previous arrangements are discarded or adjusted and shaped along the power divisions and interests of participating states. (Raustiala & Victor, 2004).

Before a regime complex, like the one related to maritime emissions, emerges, an extensive institutional framework is already in place. The institutional slate is not clean: ideas, interests and expectations are already aligned around and existing set of rules and concepts, which often contradict each other. Consequently, as Raustiala & Victor (2004) set out, the arrangements in emerging regimes develop in a path-dependent manner. So, the norms that become enshrined in agreements do not per se directly reflect current power divisions, interests and ideas. (Raustiala & Victor, 2004)

The lack of a clean slate has, according to Raustiala & Victor (2004) important implications for the evolution of rules in a regime complex. Because policy makers want to avoid conflicts between rules, they sometimes try to demarcate clear boundaries, often using ‘savings clauses’ and other mechanisms to disentangle different regimes. Disentangling and demarcation permits regimes to proceed in its own universe and decrease the likelihood to conflict other regimes. As is set out below however, some actors knowingly create colliding rules, in order to be able to change regimes, a phenomenon that is known as ‘strategic inconsistency’. (Raustiala & Victor, 2004)

To elaborate further on institutional change, the work of Streeck & Thelen (2005) is used to describe how institutions change. Streeck & Thelen (2005) identified five types of institutional transformation (see table 1). The categories: displacement, layering, drift conversion and exhaustion, could help to analyse the way in which the climate change regime complex is changing and how this could result in a new regime complex regulating the emissions from the maritime transport sector. As will be argued in the analysis, ‘conversion’ will be the most dominant type of institutional change that is characterizing the regime complex that is regulating shipping emissions. As they argue, with conversion, “different from layering and drift, […] institutions are not so much amended or allowed to decay as they are redirected to new goals, functions, or purposes”. Such redirection can be the result of new institutional contexts or through changing power relations. Building on work of other researchers, Streeck & Thelen found four factors that are related to the process of conversion.

The first, as pointed out by Pierson (2004), the designers of institutions have cognitive limits, which result in unintended consequences of their creations. Designers make mistakes and are not all seeing. This idea is the opposite of thoughts in rational-choice literature in which institutions are being considered as rational solutions to specific problems. Institutional design is, like as all types of behaviour, almost by definition irrational. Building on this assumption, Streeck & Thelen (2005, p. 26) come to the conclusion that “unintended consequences of institutional design may offer opportunities for political contestation that theoretical treatments that assume an identity between design and effect by definition cannot account for”.

The second factor of conversion that can lead to gaps is derived from Schickler (1999), who points out that political negotiation that is involved with institution-building typically involves compromise. As a result, new institutions often constitute ‘common carriers’ of actors that support these institutions for a variety of reasons. This can create ambiguities in the rules that provide space for political contestation over how the rules should be implemented and applied. The institutions are in fact continuously reinterpreted in varying economical and political conditions and different ambitions and purposes are connected to them, causing change over time while in formal context the institutions did not change.

The third source of gaps is related to different interests of actors that are

interpreting the institutional landscape. As derived from Clemens’ (1997) work,

actors will make strategic choices and interpret rules in their own interest. They could also try to circumvent rules that completely collide with their interests. Clemens identified processes in which ‘marginal’ actors, who had been neglected in the system, try to redeploy familiar organizational forms. Streeck and Thelen (2005, p. 27) use the European Union as example for the strategic use of institutions and point out that in this context “lower-order institutions regulated from above in a multilevel institutional structure are not once and for all determined by the latter: like rule takers in general, those in control of national institutions inevitably have some leeway to adjust the supranational rules that apply to them, and they can also try to change such rules by putting pressure on rule makers or rule enforcers”. Furthermore, those that are governed by national institutions often have a lot of strategic capacities to mobilize political resources and influence decision-making at the national level.

As a last important factor, Pierson (2004) emphasizes that time matters. Many institutions, al may this lesser be the case for the institutions that are regulating shipping emissions, have been around for a long time and have outlived their designers and the coalitions on which they were initially build. Over time, the nature of the problem for which institutions were created or the balance of power that allowed the creation of certain institutions can change. These processes of change can strengthen the processes

of conversion when actors try to attach their interests to existing institutions. While the institutions that are regulating shipping emissions are still relatively young, the context that these institutions face in which the problems related to air pollution and climate change are becoming more and more urgent, is developing in a fast pace.

Streeck & Thelen (2005) contradict their theory of institutional change with the theory of Katznelson (2003); in which institutions are mostly constraining the possibilities for actors to change the structure of the institutional landscape. Referring to the structure-agency debate, Streek & Thelen (2005, p. 19) set out that political institutions “[…] are not only periodically contested; they are the object of on-going skirmishing as actors try to achieve advantage by interpreting or redirecting institutions in pursuit of their goals, or by subverting or circumventing rules that clash with their interests”. Thus, they suggest that institutional change should not been seen as a process that only occurs during periods in which agency matters more than structure or reversed, but as a process in which actors adjust and cultivate change in a context that continues to create new opportunities and constraints.

Table 1 Institutional change: five types of gradual transformation (Streek & Thelen, 2005)

2.5 Regime shifting

A policy activity that can adjust institutional change is, according to Helfer (2004), regime shifting, in which actors steer towards a preferred institutional composition that matches their interests. According to Helfer (2004, p. 17), the term ‘regime shifting’ “encompasses a rich variety of moves among international law-making fora (both within and among discrete regimes and regime complexes) as well as expansions or shifts of issue area boundaries”. The type of players that are dominant in these activities can be interpreted from ones theoretical IR perspective. From a realist perspective, nation-states are the most powerful actors and thus driving regime shifting. This is, according to Helfer (2004) often supported by empirical evidence that shows that powerful states own powerful mechanisms to steer regime complexes. Liberal institutionalists, on the other hand, believing in common progress, state that international organizations can function independent of powerful states and have the potential to create an ideal situation from which everyone can benefit. Furthermore, Helfer (2004) shows that, while using different strategies, also weaker states, private networks and NGO’s can engage in regime shifting with considerable results. This puts forward a more constructivist outlook of regime shifting in which shared norms and ideas are considered as being a powerful driver of (institutional) change. In this research, it will be assumed that both ‘hard law’ and ‘soft law’ matter and that all kind of actors can engage in regime shifting actions.

The activity of regime shifting can take place both in a top down and a bottom up manner. While previous studies often assumed a top down model in which actors try to change institutional arrangements through formal negotiations resulting in new rules, the reality shows, according Raustalia & Victor (2004), not a pattern as straightforward and linear. When regime shifting happens as a top down process, international institutions develop strict and demanding rules that are more likely to conflict with national commitments. This makes it difficult to ensure effective implementation. An option is to make the decision to build greater flexibility into new arrangements, but this possibly decreases the accountability of states and thus the confidence between them, which the arrangements less valuable. Raustiala & Victor (2004) state that a regime complex is often the result of uncoordinated bottom-up initiatives. This type of regime shifting can counter the problems related to top-down institutional change.

In short, the activity of regime shifting shapes the path that institutional change is following. In the case of regime complexes, this change is a bottom-up process, in which various initiatives start to regulate the same issue. This is in line with what Streeck & Thelen (2005) have called ‘conversion’, which can then be connected to certain coordination problems. In the next chapters it will be considered if this theory is in line

with the empirical reality of the governance arrangements that regulate shipping emissions. To this purpose, the next chapter will make a strict demarcation of the empirical case and will set out the methods that are used gather data to answer the main and sub questions of this thesis.

3. Methodological approach

3.1 Introduction

In this research institutional arrangements regulating the emissions from the maritime transport sector that cover the North Sea are analysed. Together, these institutional arrangements form a regime complex in which, presumably, coordination problems lead to incoherency and inefficiency. To know more about these dynamics within the emerging regime complex, a mixed methods approach will be used.

In order to have a clear demarcated and workable case study, the regime complex will be defined geographically and sectorial. Then, it will be set out which research method will be used for what purpose on the basis of the four sub questions. The used methods in this research are literature research and interviews. In this way, the theoretical argument of this thesis will be supported by empirical evidence. For a list the interviewees, see paragraph 3.4. Furthermore, a conceptual model (see figure 4) is created to give a comprehensive outlook on the concepts used in this research.

3.2 Case selection: North Sea maritime emission regime complex

With the maritime transport sector is meant, following EU legislation on this subject, the carriage of goods or/and passengers by sea for commercial purposes (EUR-Lex, 2017). All institutions that engage with the regulation of gaseous emissions of this sector are analysed in this research. Greenhouse gas (GHG) emissions, as well as SOx, NOx, PM and other exhaust gasses are taken into account in this analysis.

3.2.2 Spatial definition

With the North Sea is meant the geographical demarcation of the area used by regulatory institutions to define the SECA zone (see figure 2). In this zone, also containing the Baltic Sea and the English Channel, very low fuel concentrations of sulphur are permitted. With regard to regulation of other exhaust gasses, however, rules are not set for the North Sea specifically. In this context, the North Sea falls within a broader institutional context of emission regulation.

3.3 Operationalization

Sub question 1: What are the main institutional elements that regulate maritime shipping emissions and do these institutions fulfil the definition of a regime complex? To answer this question the regulatory field on maritime emissions will be explored with the help of existing literature and Internet sources. The regime complex for managing climate change, set out by Keohane & Victor (2011, see figure 3) will be used as an example. As they describe: “boxes show the main institutional elements and initiatives that comprise the climate change regime complex. Elements inside the oval represent forums where substantial efforts at rule-making have occurred, focused on one or more of the tasks needed to manage the diversity of cooperation problems that arise with climate change; elements outside are areas where climate rule making is requiring additional, supporting rules” (Keohane & Victor, 2011, p.10).

Figure 3 The regime complex for managing climate change (Keohane & Victor, 2011, p. 10)

Sub question 2: How could the dynamics within the regime complex on maritime emissions be characterized?

To answer this question, the framework of Streeck and Thelen (2005) about institutional change will be used to analyse the dynamics within the regime complex on maritime emissions and the way in which this regime complex is originated from the broader regime complex on climate change. The results will be supplemented with empirical knowledge obtained from interviews about the dynamics in this regulatory sector.

Sub question 3: What coordination problems can be observed within this regime complex and how could these problems be connected to processes of institutional change?

To answer this sub question, links will be made between the prevailing coordination problems, about which information will be gathered by interviews, and the way in which institutional change has altered the regime complex over time, as set out in sub question two. Furthermore, these developments will be situated in the broader context of the (international) nature of the maritime transport sector that policymakers have to deal with.

3.4 Data

The persons interviewed for this research are: • Pieter Kroon, interview on April 4, 2017

• Welmoed van der Velde, interview on April 3, 2017 • Erik Molenaar, interview on May 4, 2017

• Sander den Heijer, interview on May 11, 2017 • Nick Lurkin, interview on May 11, 2017

• Niels Lycklema, written reaction on May 8, 2017

For more information about the interviewees and their relevance for this research, see appendix II. The interviewees will be referred to in the text with “pers. comm.”, their last name and the date of the interview. Note that all interviews have been enacted in Dutch. For this reason, the author translated all literal quotes in this thesis. It is attempted to reflect what has been said during the interviews as accurarate as possible.

Figure 4 Conceptual Model (A, B, C and D represent different institutional elements of the regime complex)

4. Empirical context: emissions within the North

Sea maritime transport sector

This chapter explores different aspects that characterize the maritime transport sector. Since the operations of most shipping companies are not limited to a certain geographical area, this chapter does not consider the shipping companies that operate the North Sea area in particular. It will start of with an overview of the environmental impacts of the sector’s emissions and the technical possibilities to mitigate this issue. Then it will set out some economical features of the sector that are important to take into consideration when trying to regulate the issue of shipping emissions. Lastly, the jurisdictional context in which the maritime transport sector operates and important treaties that are applicable will be set out. These different aspects will serve as the background against which different regulatory measures have been taken.

4.1 Environmental impact of shipping emissions and related technological

possibilities

The transport of goods by maritime vessels is, per kilogram of material, a relatively clean form of transportation and is therefore often preferred above air or road transport. However, the emissions from the maritime transport sector have significant impacts on the environment and contribute to air pollution globally. About 15% of nitrogen oxides (NOx) and 5-8% of sulphur oxides (SOx) emitted by human activity can be attributed to maritime ships (Viana et al., 2014). A large proportion, nearly 70%, of these emissions occurs within 400km from the coast. Because of this, ships have the potential to contribute significantly to the degradation of air quality in coastal areas. Furthermore, since the engines of large ships are not always switched of when at berth, emissions are also generated in ports.

In other industries, Europe has been making large efforts to reduce all sorts of emission sources, resulting in an increase of the relative weight of shipping emissions to the total of anthropogenic emissions. Several studies show that land based sulphur emissions have been reduced successfully since the 1980’s in Europe, where in the ’00 the total SOx emissions have been fallen by 54% (Viana et al., 2014). However, while shipping covers a large share of international transport of goods, its emissions are, according to the IMO (2008), not well quantified and it is one of the least regulated anthropogenic sources.

That shipping had largely escaped attention can, according to Cullinane & Bergqvist (2014) be attributed to the fact that regulations have been difficult to agree upon because of the international nature of the industry. Besides this, the environmental impacts of shipping take place at see and so have fewer directly visible impacts on

consumers. Lurkin (pers. comm., May 11, 2017) adds to this that it takes a lot of time to implement environmental innovations into ships because of their long lifespan. When developments and new regulations follow each other too quickly, this can lead to resistance among shipping companies and shipbuilders.

Another difficulty in quantifying the environmental impact of shipping arises because it is hard to calculate the exact amount of gasses that are emitted. Shipping emissions are closely related to the ship’s consumption of fuel. Historically, estimates of fuel use have been derived from top-down analyses of sales of fuel bunker suppliers. However, over the last two decades, concerns rose that results of this approach significantly underestimated the global fuel consumption of ships. Therefore it has become more common to use a bottom-up approach by using data about the activity and characteristics of individual ships. As can been observed from figure 5, estimates made with this approach also vary because of the different modelling processes employed and assumptions that are made. What this figure also makes clear is that, despite technical improvements and stricter regulations, global fuel consumption by ships has increased significantly over the last decades. (Corbett and Koehler, 2003)

Besides the amount of fuel used, the quality of the fuel is also something that is important when analysing the environmental impact of shipping. The diesel used in 95% of the ships is heavy bunker oil of a very low quality, lower than the fuel used in road vehicles. It is much cheaper because it is technically a waste product of the standard oil refining process and thus ‘the bottom of the barrel’. Its consistency is somewhere in the middle of solid and liquid and therefore to thick for road vehicles. The use of this low quality fuel result in that also technical advanced marine engine produce more polluting exhaust gasses per kJ than land based diesel engines. Molenaar (pers. comm., May 4, 2017) adds: “They also need to add all kinds of chemicals [to the bunker fuel] to add viscosity, it's really the biggest mess that is out there. So if you want cleaner fuel then you have to have very different types of engines. These are really huge investments”. Furthermore, by using bunker oil, some pollutants are relatively more present in the exhaust gases than with the use of other fuels (see figure 6). These substances are, also in comparison of CO2 emissions from the industry, of greater concern in relation to the shipping industry than other modes of transport (Cullinane & Bergqvist, 2014).

Another technical aspect of the maritime industry has to do with the delay between making plans for implementing new technologies and the actual implementation of them. Also Kroon (translated) emphasised this delay: “when a decision is made about new sulphur regulations, it will take a while because the oil needs to be cleaned, the sulphur has to be destracted from the oil at the refinery. To do this, refineries have to be adjusted. Planning these developments will take, according to Kroon, about 10 years. Hence, the time delay between the decision the actual implementation is quite long.

Furthermore, a ship engine lasts for a long time. When a ship is build, the motor is put in and then close the deck the rest of the ship is build. So if it is desired to replace a motor with a motor with a cleaner engine, a large part of the ship will be demolished. This is an expensive operation. However, according to Kroong, could be speed up. While it is very expensive to replace the engine, exhaust gasses could be reached more easily. By, for example, installing scrubbers, exhause gasses could be cleaned.

Figure 5 World fleet fuel consumption. Note: the large diamond shows the International Maritime Organisation (IMO) consensus ‘best estimate’ and the whiskers the high and low bound estimates (source: Buhaug et al., 2009)

Figure 6 Estimates of other emissions from shipping (source: Marintek, 2008)

4.2 Economical aspects of mitigating shipping emissions

Traditionally, maritime transport problems have been analysed using cost-benefit, economic or other optimisation criteria from the perspective of the logistics provider, carrier or shipper. This type of analysis largely ignores environmental issues, or doesn’t consider these issues as of main concern. The concept of green maritime logistics tries to bring the environmental dimension into maritime challenges. By doing this, criteria that are more relevant from a societal point of view may compromise the benefit of the

private end uses. However, in some cases win-win situations will be possible. (Psaraftis, 2016)

What exactly green shipping means is debatable. When, as a hypothetical situation, the goal would be set to reduce shipping emissions as much as possible in absolute terms, we should consequently strive to apply a series of far-reaching technological measures to achieve that goal. However, the outcome of these measures might be that shipping becomes unprofitable resulting in a lot of side-effects like for example shifts to other modes of transport, reduction of trade and relocation or shutdown of production sites. In these cases, shipping emissions can be driven down to zero, but a resulting increase in land-based transport, which is less efficient when it comes to CO2 emissions, could mean an even faster temperature rise worldwide. Furthermore, when transport becomes too costly and production sites are moved to other countries, this could lead to less efficient production methods that can also lead to an increase of emissions. Thus, ‘greening’ the maritime sector may me more complex than they appear at first glance and it is key to find a balance between environmental and economic objectives. By taking this into account, Psaraftis (2016, p. 134) comes to the following definition of green maritime logistics: “Green maritime logistics is an attempt to attain an acceptable environmental performance in the maritime transport supply chain, while at the same time respecting traditional economic performance criteria”. (Psaraftis, 2016)

What is important to notice is that, since fuel consumption is a huge expense for the maritime industry, using efficient motors is better for environment and can deliver economic benefits for the sector as well. Moreover, there is also a direct link between the price of a ship and oil prizes. As Kroon (pers. comm., April 4, 2017) sets out: “When the oil price rises, ships will sail slower immediately, this is a direct relation”. Fuel makes out a large share of the costs of shipping. When the fuel price rises ships will sail slower with the result that more ships are needed. For example, some shipping comanies are sailing up and down between the US and Europe with twenty ships. When the oil price is high, they all need 22, so they want to expand their fleet with two more ships.” Kroon adds that in the latter situation, the overall fuel use, and thus the pollutants emitted, will be lower because when ships sail slower, they consume less fuel per kilometer. Because the same amount of freight is carried, but with more ships that are using less fuel, the overall consumption will reduce. Van der Velde (pers. comm, April 3, 2017) also points to the link between incentives for efficient shipping and current oil prices: “[…] the oil price is currently low, so you do not see a lot of incentives, for example, to be very economical. If the oil is very expensive then you will not use as much”. Thus, both sailing slower and using more efficient motors will reduce harmful exhaust gasses and reduce fuel expenses of maritime shipping companies.

4.3 Jurisdictional context of maritime transport sector

In international law, a legal person can be held responsible when it invades the legal interest of another legal person. As Shi (2016, p. 44) sets out: “to determine international environmental law responsibility and how it applies to specific areas, a good understanding of the principles of State jurisdiction is fundamental”. In the field of maritime air pollution and GHG emissions, the 1982 Law of the Sea Convention (LOSC) and the International Convention for the Prevention of Pollution from Ships 73/78 (MARPOL) and many other treaties will apply to this issue. State jurisdiction over maritime pollution can be examined from three perspectives: flag State jurisdiction, coastal State jurisdiction and port State jurisdiction.

Jurisdiction in the context of the maritime transport sector can be defined as “the competence of states to prescribe and enforce legislation against vessels engaged in pollution (Tan, 2005, p. 176)”. This definition already indicates the existence of two types of State jurisdiction: ‘prescriptive’ (or ‘legislative’) jurisdiction and ‘enforcement’ jurisdiction. The first type empowers states to “enact or promulgate substantive pollution control standards (Tan, 2005, p. 176)”. However, especially in waters that do not belong to the internal waters and territorial sea of a State, these standards should and often do comply with ‘generally accepted’ international standards. In the maritime industry, these internationally agreed standards are drafted by the IMO. ‘Enforcement’ jurisdiction, on the other hand, authorises a State to “prevent or punish the actual violation of the relevant standards (Tan, 2005, p. 176)”. A flag, coastal or port State of a particular vessel has different prescriptive or enforcement jurisdiction.

First, the State in which a particular vessel is registered or to whose flag it is entitled is called the flag State. In international law, the flag State “enjoys the primary jurisdiction over the ship flying its flag, and it is the only subject which has jurisdiction to enforce regulation applicable to ships on the high seas (Shi, 2017, p. 46)”. Flag States have, both under MARPOL as LOSC, prescriptive as well as enforcement jurisdiction (Shi, 2016).

Second, the coastal State can be defined, following Churchill and Lowe (1999, p. 344), as “the state in one of whose maritime zones a particular vessel lies”. Coastal States have, contrary to flag States, strong incentives to restrict ships navigating within their maritime zones since polluting emissions, particularly SOx, NOx and PM, often causes most damage to those states. However, the opportunities for stronger regulations by coastal states are restricted by the LOSC, to maintain the navigational rights of ships and to maintain a balance between coastal and (foreign) flag states. The result is that, while in internal waters and ports states have full legislative and enforcement jurisdiction, these jurisdictions in the territorial sea are not unlimited. A coastal State is allowed to apply its national laws on environmental protection to its territorial sea, but

these rights should not hinder the exercise of innocent passage of foreign ships, and such regulations should not include matters related to the design, construction, manning or equipment of foreign ships other than giving effect to accepted international rules or standards. Also the right to designate an Emission Control Areas, like the SECA zone of the North Sea, is a competence that coastal States can derive from MARPOL. (Shi, 2016) Third, the port State refers to “the State in one of whose ports a particular vessel lies” (Churchill and Lowe, 1999, p. 344). Port States have, in contrast to the limited jurisdiction of coastal States, substantial legislative and enforcement jurisdiction over pollution within their ports. This can be a remedy against the inadequate jurisdiction of flag States in foreign ports. Since ports are situates in a state’s internal waters, a port State may enforce regulations of maritime pollution and GHG emissions from internal shipping, using this as a condition for entry of foreign vessels into its ports and internal waters. Different certifications and inspection rules under MARPOL serve as the basis for enforcement jurisdiction of port States. When no valid certificate is present at a certain ship, the port State should make clear that the ship does not sail until it can show it does not present an unreasonable threat of harm the marine environment and the port State needs to forward a report to the flag State so this state can undertake action. Furthermore, the LOSC (article 218) gives port States the power to investigate and prosecute violations of the Convention wherever they have taken place, to serve public interest. In the territorial waters of other states, however, the port State can only act by request from the state concerned. Because of this rights, port State’s have often been viewed as possessing a kind of ‘universal jurisdiction’. However, a lot of states, among which the Netherlands, do not (often) prosecute foreign ships since these legal proceedings can be very costly. (Shi, 2016)

In theory, flag States do have a lot of power when it comes to regulating their ships. However, as Molenaar (pers. comm., May 4, 2017) sets out: “If you [as a flag State] want your ships to be very clean, then there's nothing that stops you. And of course you can do that as flag state individually, but in concept also with others. But then your ships will become more expensive and then your competitive position will decrease”. Furthermore, the ‘flagging-out’ of national fleets to open registers can be seen as a factor that reduces the power of a flag State. Flagging-out can, according to Sampson (2013, p. 253), be seen as the process of globalisation within the shipping sector and resulted in 57% of the world fleet being registered in the twenty largest open registers. Registering under a flag of convenience has been widespread and shipping companies have been doing this in pursuit of competitive advantage by having the freedom to recruit cheap labour from developing countries. The result of this development was that the traditional means for enforcing regulations via flag States was eroded, especially since new open registered often exercised little regulatory control over