Regulation Issues and Globalisation

I would like to discuss the ways globalisation impacts regulation issues. I will do this by using the case study of the sinking of the ship Prestige, and shipping regulations and how the effects of globalisation have impacted the regulation, leading to this disaster.

Shipping is very important to the world’s economy, as the documentary Addicted to Cheap Shopping? (BBC, 2007) shows that: “95 percent of household goods have been transported by sea at some point in their production,” This is a clear example of globalisation in process; the need for us to have products produced right around the globe because the production may be cheaper there, or better made. The ships are then used to take these products to their destination.

The Prestige was carrying oil. Oil is a vital commodity in this globalised world. Steger gives the statistic that just the “USA alone consumed 6902kg oil equivalent of fossil fuels per capita in 2001” (Steger, 2009).

On 19 November 2002 the Prestige sank, spilling 40,000 tons of heavy fuel oil into the ocean. This caused catastrophic effects on the environment. (adapted from Frank, 2005)

The disaster happened due to many reasons, but one of the most important was the difficulty and lack of regulation in the shipping industry. This industry is very difficult to regulate because of the huge numbers of countries involved with each ship.

With the Prestige, there were at least eight different countries involved in the ship, including: the owners, the crew, the captain and the ship’s flag. This was because the ship was using a system known as, “flags of convenience”. (ITF 2008)

The issue of “flags of convenience” means there is not one country taking responsibility for the ship, and when there was a problem, there was no overarching power to set the law, as: “A flag of convenience ship is one that flies the flag of a country other than the country of ownership.” (ITF 2008)

There is also the issue of who owns the sea, as when ships are out at sea, “is it the flag state that has overall responsibility for the implementation and enforcement of international maritime regulations for all ships ‘flying its flag.’” (ISF, 2006) When a ship is in open sea, what country’s laws are they subject to? It seems that these problems have not yet been addressed and in the meantime, disasters like the Prestige happen.

 

I would now like to discuss the different aspects of globalisation as described by Steger, and apply them to the aspects of globalisation in the Shipping case study.

Steger originally describes the three different dimensions of globalisation as being: economic, political and cultural.

 

 

Economic:

“Economic globalisation refers to the intensification and stretching of economic interrelations across the globe.” (Steger, 2009) Trade agreements being established between different countries which are adopting a “Neoliberal” (Steger, 2009) approach to the economy. This approach tries to “free completion, the elimination of taxes and other barriers.” (Steger, 2009)

There has been a clear shift towards this type of economic relation in shipping. The  International Ship Owners Federation, (ISF) says that the failure in regulation is not overall but just due to a few number of “sub-standard operators.” (ISF, 2006) This lack of interference from governments means that the industry is self-correcting and any of these “sub-standard operators” will not last in the industry for very long.

This, however, has also had negative effects on some other economies. The example of the sinking of the Prestige had a devastating impact on some of the small economies on the Spanish coast. “Fishing has been banned indefinitely, right along the northwest Spanish coast. The boats are idle, communities face ruin.”(Video 5, OU) These economies may not be big but their decline has a huge impact on the people involved.

It is not all of the shipping industry that would like to see less regulation though. The International Transport Workers’ Federation (ITF) would like to see more regulation because, they say, without it there are not enough regulations to protect the workers and the whole operation is just run to make a profit. They say: “Globalisation has helped to fuel this rush to the bottom […] ship owners are forced to look for the cheapest and least regulated ways of running their vessels in order to compete.” (ITF 2008)

I feel that these last two examples show that the economic aspects of globalisation in this case are benefiting the big businesses a lot more than the little workers. These big businesses do not care for the workers and only care for one thing; the profit. “Every aspect of its operations was calculated to avoid tax, ownership obligations and regulatory scrutiny” (Hutton, in the Observer, 2002)

 

Political:

“Political globalisation refers to the intensification and expansion of political interrelations across the globe.” (Steger, 2009) In the past, each country had its own government and its own laws and recognised no other. Now, however, with globalisation and the creation of organisations such as the European Union, there are greater powers than governments when it comes to law.

In my opinion, shipping is far behind in regulation when it comes to political globalisation. The issue of flags of convenience becomes a political thing. This means that ships are more likely to fly flags of countries that are performing well because they are less likely to be stopped and checked at ports.

“Moreover, on ships using flags with a poorer record, port state control inspectors may be more inclined to make an issue of routine non-critical deficiencies caused by genuine ‘wear and tear’ during the preceding voyage.” (ISF, 2006) But as these flags seem to have little correspondence to the actual country of the ship, as shown by the Prestige example, they are very difficult to police.

Flags will also be chosen depending on the laws of the government of that country and whether they have strict and difficult laws to a heed to, or less strict, maybe easier, laws.

 

Cultural:

“Cultural globalisation refers to the intensification and expansion of cultural flows across the globe.” (Steger, 2009) I would like to argue that the globalisation of culture has not had much effect on the regulation of the shipping industry. If culture was entirely universal due to globalisation, then each country would have the same ideas, the same culture of health and safely and regulation, and there would not be the problem of differences in these.

It was noted that the crew was from different countries and that they could find it difficult to communicate. Steger says that the number of languages in the world are rapidly declining, dropping from, “14500 in 1500 to less than 7000 in 2007” (Steger, 2009)  but there is clearly still a huge difference in the languages spoken on the ships. Maybe if regulations meant that the crew had to be able to communicate well with each other, the problem with the Prestige might not have occurred.

 

Steger also argues that globalisation is a contested subject. In his book he adds ecological and ideological aspects of globalisation. He says that, “the ecological impacts of globalisation are increasingly recognised as the most significant and potentially life threatening for the world.”

This is very clear from the sinking of the Prestige. The oil spill had a huge and negative impact on the environment surrounding it. As the news video says: “Every tide brings in more heavy thick oil. This beautiful coastline is in grave danger. Look closely at the waves and the rocks and you see the black sheen everywhere […]Sea birds are suffering, from gulls to cormorants, the destruction of a renowned marine environment has begun.” (Video 5, OU)

It is often the case that the environment is the last thing that is thought about when countries decide on regulations, as it is often the ecological factors that stand in the way of growth.

I can find no clear examples of the ideological aspect of globalisation in my case study.

In conclusion, I believe that globalisation has had a negative impact on regulation, meaning there is a lack of it. This lack of regulation has led to disasters such as the sinking of the Prestige.

References:

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