Economic Genuine Link: Impacts on Liberian Flag Shipping

Phasing out of open registries, supported by most developing nations at the United Nations Conference on Trade and Development (UNCTAD), would have triggered a chain reaction among open registries, ship owners, seafarers, and the revenues earned by those supplying shipboard labor. Adherence to the criteria proposed by developing states concerning economic "genuine link" is unsatisfactory to ship owners of developed nations, since it would increase their operating costs. Additionally, if the concept was enforced, it is likely that open registries would have experienced a massive dis-enrollment. The application of three techniques, the Chi-Square Statistic, and Index of Seafarer Displacement, and an Index of Revenue Deduction, revealed that Liberian ship owner’s representatives responses to hypothetical flag state manning percentage requirements varied. Three potential ship-owner options, to go out of business, automate, or re-flag, due to higher labor costs were examined to estimate their relative importance. Finally, nations supplying labor to open registries and revenues earned were assessed to determine possible impacts on Liberian bulk shipping.