Provision in a U.S. Coast Guard funding bill could adversely impact Liberia’s flourishing maritime programs with potential drop in revenue should it become law.
Language in the Coast Guard Authorization Act of 2023, which advanced out of committee in late April, seeks to limit the use of foreign vessels and mariners in the installation of offshore energy projects, including many offshore wind developments still in their infancy.
Instead, ships working on these projects would be subjected to a requirement that they employ a crew from the country under which the ship is flagged; a restriction on the number of foreign work visas for mariners; and tougher security requirements under a clause added by Reps. Garret Graves (R-La.) and John Garamendi (D-Calif.), both members of the House Transportation and Infrastructure Committee.
Currently, foreign-flagged ships with multinational crews are allowed to perform a number of essential tasks involved in the installation of offshore wind turbines and the laying of cables that transmit electricity from those turbines onto the shore. Restricting this practice is appealing to Republicans, who are generally sympathetic to the U.S. maritime industry, as well as to Democrats, who have close ties to the maritime labor unions that represent many of the U.S. maritime industry’s employees.
The law would effectively bar the vast majority of foreign ships from working on offshore energy projects.
The global shipping industry relies heavily on multinational crews to work ships that are “flagged,” or formally based, in countries with minimal taxation and regulatory regimes, like Panama, Liberia and the Marshall Islands.
The crewing requirements proposed by Graves and Garamendi would come on top of a century-old law, the Jones Act, which already requires that ships used for the transportation of goods between two U.S. ports be owned, operated and manned by Americans. That means that the sea vessels involved in transporting wind turbine parts from the U.S. coastline out to sea must be U.S.-flagged vessels.
Majority of these ships command businesses in the United States and China, transporting manly US imported oil.
The Liberian registry is the second largest in the world with over 4,000 ships. In 2021, it hit 200 million gross ton, which represents approximately 12% of the world’s ocean-going fleet.
Official records put fees and taxes generated yearly around $18 million. According to some estimates money from the shipping registry amounts to 25% of the government annual income.
