Shipping Organization: World Now Has Two Trade Systems
Two parallel global trade systems—one legal and the other “operating by evading sanctions [and] attacking vessels”—are emerging, an international shipping alliance said in a rare statement this week (The Wall Street Journal, subscription).
What’s going on: Due to war, restrictions and chokepoints around the world, “hundreds of vessels are now part of shadow fleets that evade sanctions and sail without insurance, fragmenting supply chains” and “forcing ships to reroute from key waterways like the Strait of Hormuz, the Suez [Canal] and the Red Sea,” the Consultative Shipping Group said on Tuesday.
- The CSG is an informal cooperation of the maritime bodies of 18 countries, including the U.K., Germany, Japan and Denmark.
- These shadow fleets and vessel attacks do not constitute a passing phenomenon, the group said; rather, they “signal … a structural shift in the operating environment of global trade.”
Why it’s important: About 80% of global trade moves by sea and is regulated by the International Maritime Organization, “a United Nations body made up of 176 countries that have adopted its rules on safety, no-trade barriers and environmental protection.”
- The new, extralegal trade system ignores those rules, the group said, “increas[ing] risk and bypass[ing] environmental and safety standards, undermining trust and predictability in maritime markets” (CNBC).
What they say should be done: Maritime countries, the group urged, should “actively support and uphold the core principles governing shipping” by enforcing existing international rules across jurisdictions, according to CNBC.
- “Strong international cooperation is not a constraint on sovereignty; it is a prerequisite for effective governance in an interconnected world.”
