Flag of convenience

{{Short description|Registering a ship in a foreign country}} {{other uses|Flag of convenience (business)|Flag of Convenience (band)}} {{use dmy dates|date=July 2021}} {{use British English|date=July 2021}} {{Admiralty law}}

'''Flag of convenience''' ('''FOC''') refers to a business practice whereby a ship's owners register a merchant ship in a ship register of a country other than that of the ship's owners, and the ship flies the civil ensign of that country, called the flag state.<ref name="Bernaert">Bernaert, 2006, p. 104.</ref> The term is often used pejoratively, and although common, the practice is sometimes regarded as contentious.

Each merchant ship is required by international law to be registered in a registry created by a country,<ref name="icftu7">ICFTU et al., 2002, p. 7.</ref> and a ship is subject to the laws of that country, which are used also if the ship is involved in a case under admiralty law. A ship's owners may elect to register a ship in a foreign country so as to avoid the regulations of the owners' country, which may, for example, have stricter safety standards. They may also select a jurisdiction to reduce operating costs, avoiding higher taxes in the owners' country and bypassing laws that protect the wages and working conditions of mariners.<ref name="kemp">Kemp, 1976.</ref> The term "flag of convenience" has been used since the 1950s. A registry which does not have a nationality or residency requirement for ship registration is often described as an '''open registry'''. Panama, for example, offers advantages such as easier registration (often online), the ability to employ cheaper foreign labour, and an exemption on income taxes.

The modern practice of registering ships in a foreign country began in the 1920s in the United States when shipowners seeking to serve alcohol to passengers during Prohibition registered their ships in Panama. Owners soon began to perceive advantages in terms of avoiding increased regulations and rising labor costs and continued to register their ships in Panama even after Prohibition ended. The use of open registries steadily increased, and in 1968, Liberia grew to surpass the United Kingdom with the world's largest ship register.

Traditional maritime nations, mainly from Europe, responded to this practice with creation of so-called "'''second registers'''": open registries, using national flags or flags of semi-sovereign offshore dependencies.<ref>{{Cite journal |last=Carlisle |first=Rodney |date=2009 |orig-date=2009-07-01 |title=Second Registers: Maritime Nations Respond to Flags of Convenience, 1984-1998 |url=https://www.cnrs-scrn.org/northern_mariner/vol19/tnm_19_319-340.pdf |journal=The Northern Mariner / Le Marin du Nord |publisher=Canadian Nautical Research Society |publication-date=2009 |volume=XIX - 2009 |issue=3 |pages=319–340 |doi=10.25071/2561-5467.320}}</ref> That process begun in 1984 with the Isle of Man registry created as a second UK register. Soon after Norway and the Netherlands followed this practice adopting Norwegian International Ship Register (NIS) and Netherlands Antilles respectively. France established in 1989 Kerguelen Islands Register (replaced by International French Register (''Registre International Français'' - ''RIF'' in 2005<ref>{{Cite web |title=France {{!}} Guide to Ship Registries |url=https://www.guidetoshipregistries.com/shipregistries-country/france |access-date=2024-08-30 |website=www.guidetoshipregistries.com}}</ref>) and Germany (Federal Republic of) created German International Register (GIS) in the same year. The last two registries are still (in 2025) considered as flags of convenience.<ref name="itf-list" />

{{As of|2025}}, more than half of the world's merchant ships in terms of deadweight tonnage are registered in open registries.<ref name="review" />

==Background== Open registries have been criticised, mainly by trade union organisations based in developed countries, especially those in the European Union, United States, Japan, Canada, or the United Kingdom. One criticism is that shipowners who want to hide their ownership may select a flag-of-convenience jurisdiction which enables them to be legally anonymous. Some ships with flags of convenience have been found engaging in crime, offering substandard working conditions, and negatively impacting the environment, primarily through illegal, unreported and unregulated fishing. Prior to the implementation of the International Convention on Tonnage Measurement of Ships, 1969, shipowners may have selected a jurisdiction with measurement rules that reduced the certified gross register tonnage of a ship, to reduce subsequent port of call dock dues. Such was a consideration when Carnival Cruise Line changed the flag of the RMS ''Empress of Canada'' in 1972 to that of Panama.{{citation needed|date=April 2020}} In 2011, Cunard Line registered all its ships in Bermuda, which, besides other considerations, enabled its ship captains to marry couples at sea. Weddings at sea are described as a lucrative market.<ref name="registry">{{cite web |author=Jonathan Bell |date=21 October 2011 |title=Luxury cruise ship line Cunard switches to Bermuda registry | Bermuda News |url=http://www.royalgazette.com/article/20111021/NEWS/710219930 |website=Royal Gazette |access-date=7 November 2012}}</ref>

Maritime industry practitioners and seafarers from other countries contend that this is a natural product of globalisation. Supporters of the practice, however, point to economic and regulatory advantages, and increased freedom in choosing employees from an international labour pool. Publications from as early as 1962 argue that shipowners from developed countries use the practice to be competitive in a global environment.<ref>{{cite book|last1=Boleslaw Adam|first1=Boczek|title=Flags of Convenience: An International Legal Study|date=1962|publisher=Harvard University Press|location=Boston}}</ref>

In 2010 in a message connected to the World Maritime Day, the Secretary-General of the International Maritime Organization gave recognition to the present status of the open registries and noted that the seafarers from some developing countries are providing a major source of foreign currency to their home economies:

<blockquote>The development of open registries for ships has given the shipping industry the flexibility to recruit its manpower from alternate sources, with the result that developing and newly industrialized countries now provide the majority of seafarers for the entire global fleet – not just for the ships flying their own country's flag.<ref name=":1">{{Cite web |last=Mr. Efthimios E. Mitropoulos |title=Circular letter No.3091 |url=https://www.argentine-embassy-uk.org/maritimeday/en/3091.pdf |access-date=2024-08-30 |publisher=International Maritime Organization |page=17 |publication-place=London |publication-date=29 July 2010 |ref=Ref. A4/A/1.17}}</ref></blockquote>

===Legal context=== International law requires that every merchant ship be registered in a country.<ref name="icftu7"/> The country in which a ship is registered is its flag state,<ref name="Bernaert" /> and the flag state gives the ship the right to fly its civil ensign.<ref name="unclos91">That the flag state gives the right to fly its flag, see United Nations, 1982, Article 91. That this flag is called a civil ensign, see De Kleer, 2007, p. 37.</ref> A ship operates under the laws of its flag state, and these laws are used if the ship is involved in an admiralty case.<ref name="ham04">Hamzah, 2004, p.4.</ref> A ship's flag state exercises regulatory control over the vessel and is required to inspect it regularly, certify the ship's equipment and crew, and issue safety and pollution prevention documents. The organization which actually registers the ship is known as its registry. Registries may be governmental or private agencies.

===Reasons for adopting a flag of convenience=== The reasons for choosing an open register are varied and include tax avoidance,<ref name="working99"/> the ability to avoid national labor and environmental regulations,<ref name="working99"/><ref name="dh1980">Dempsey and Helling, 1980.</ref> and the ability to hire crews from lower-wage countries.<ref name="working99">Working, 1999.</ref><ref>{{cite web |url=http://www.thefreedictionary.com/flag+of+convenience |title=Flag of convenience |work=The Free Dictionary by Farlex |year=2003 |access-date=2010-08-25}} or {{cite web |url=http://www.yourdictionary.com/flag-of-convenience |title=Flag of convenience |work=Your Dictionary |year=2003 |access-date=2010-08-25}}</ref> National or closed registries typically require a ship be owned and constructed by national interests, and at least partially crewed by its citizens. Conversely, open registries frequently offer on-line registration with few questions asked.<ref name="richardson">Richardson, 2003.</ref><ref name="neff07">Neff, 2007.</ref> The use of flags of convenience lowers registration and maintenance costs, which in turn reduces overall transportation costs. The accumulated advantages can be significant, for example in 1999, 28 of the American company SeaLand's fleet of 63 ships were foreign-flagged, saving the company up to US$3.5 million per ship every year.<ref name="working99"/>

===Accidents and reform=== [[File:Amoco Cadiz 1 edit1.jpg|thumb|right|The sinking of ''Amoco Cadiz'' led to concerted ship inspections by port states.]]

The environmental disaster caused by the 1978 sinking of the {{MV|Amoco Cadiz}}, which flew the Liberian flag, spurred the creation of a new type of maritime enforcement.<ref name="paris-about">{{cite web|url=http://www.parismou.org/ParisMOU/Organisation/About+Us/History/default.aspx |title=A short history of the Paris MOU |author=Secretariat of the Paris Memorandum of Understanding on Port State Control |year=2010 |publisher=Paris Memorandum of Understanding on Port State Control |location=Paris |archive-url=https://web.archive.org/web/20100406081207/http://www.parismou.org/ParisMOU/Organisation/About+Us/History/default.aspx |archive-date=2010-04-06 |access-date=2010-07-01 |url-status=dead }}</ref> Resulting from strong political and public outcry over the ''Amoco Cadiz'' sinking, fourteen European nations signed the 1982 Paris Memorandum of Understanding on Port State Control or Paris MOU.<ref name="paris-about"/> Under port state control, ships in international trade became subject to inspection by the states they visit. In addition to shipboard living and working conditions, these inspections cover items concerning the safety of life at sea and the prevention of pollution by ships.<ref name="paris-about"/> In cases when a port state inspection uncovers problems with a ship, the port state may take actions including detaining the ship.<ref>Secretariat of the Paris Memorandum of Understanding, 2009.</ref> In 2015, member states of the Paris MOU conducted 17,858 inspections with deficiencies, which resulted in 595 detained vessels and 11 banned.<ref>{{Cite web|url=https://www.parismou.org/publications/98|title=Secretariat of the Paris MoU 2015|access-date=10 March 2017|archive-date=12 March 2017|archive-url=https://web.archive.org/web/20170312043232/https://www.parismou.org/publications/98|url-status=dead}}</ref> Member states of the Tokyo Memorandum of Understanding conducted 17,269 ship inspections in 2015, recording 83,606 deficiencies which resulted in 1,153 detentions.<ref>{{Cite web|url=http://www.tokyo-mou.org/doc/ANN15.pdf|title=Secretariat of the Tokyo MoU 2015}}</ref>

The principle that there be a genuine link between a ship's owners and its flag state dates back to 1958, when Article 5(1) of the Geneva Convention on the High Seas also required that "the state must effectively exercise its jurisdiction and control in administrative, technical and social matters over ships flying its flag."<ref name="dandrea2">D'Andrea 2006, p.2.</ref> The principle was repeated in Article 91 of the 1982 treaty called the United Nations Convention on the Law of the Sea and often referred to as UNCLOS.<ref name="icftu7"/> In 1986, the United Nations Conference on Trade and Development attempted to solidify the genuine link concept in the United Nations Convention on Conditions for Registration of Ships.<ref name="1986treaty">{{cite web |url=https://treaties.un.org/pages/viewdetails.aspx?src=treaty&mtdsg_no=xii-7&chapter=12&clang=_en |title=United Nations Convention on Conditions for Registration of Ships |date=1986-02-07 |website=United Nations Treaty Collection}}</ref><ref name="dandrea6">D'Andrea 2006, p. 6.</ref> The Convention for Registration of Ships would require that a flag state be linked to its ships either by having an economic stake in the ownership of its ships or by providing mariners to crew the ships.<ref name="dandrea6"/> To come into force, the 1986 treaty requires 40 signatories whose combined tonnage exceeds 25% of the world total.<ref name="1986treaty"/><ref name="dandrea6"/> Between 1986 and 2012, 24 countries signed or ratified the treaty. {{As of|2026}}, it has not entered into force.<ref name="1986treaty"/>

==History== Merchant ships have used false flags as a tactic to evade enemy warships since antiquity, and examples can be found from as early as the Roman era through to the Middle Ages.<ref name="wis113">Wiswall 1996, p. 113.</ref> Following the American Revolutionary War, merchantmen flying the flag of the fledgling United States quickly found it offered little protection against attack by Barbary pirates – many responded by seeking to transfer their registry back to Great Britain. The use of false flags was frequently used as a ''ruse de guerre'' by the British during the Napoleonic Wars and the United States during the War of 1812.<ref name="kemp"/> During the mid-19th century, slave ships flew various flags to avoid being searched by British anti-slavery fleets.<ref>{{cite news |last=Bornstein |first=David |url=http://opinionator.blogs.nytimes.com/2011/01/13/the-transatlantic-slave-trade-and-the-civil-war/ |title=The Transatlantic Slave Trade and the Civil War |website=Opinionator.blogs.nytimes.com |date=2011-01-13 |access-date=2011-03-28}}</ref> In the American Civil War, it was reported that the combined effect of the simultaneous Taiping Rebellion and the raids of CSS ''Alabama'' in the Pacific had increased shipping insurance prices to the point that nearly all American ships in China resorted to sail under the flags of Portugal, Prussia, or Peru.<ref>Larkin, T. M. (2023). The Global American Civil War and Anglo-American Relations in China's Treaty Ports. ''The Historical Journal'', 66(2), 325-347.</ref>

The ''Belen Quezada'', in August 1919, was the first foreign ship to be re-registered in the Panamanian registry, and was employed in running illegal alcohol between Canada and the United States during Prohibition.<ref name="des76">DeSombre 2006, p. 76.</ref> The modern practice of registering ships in foreign countries to gain economic advantage originated in the United States in the era of World War I, though the term "flag of convenience" did not come into use until the 1950s.<ref>Merriam-Webster Incorporated, 2003, p.474.</ref>

[[Image:Furuseth-La Follette-Steffens-1915.jpeg|right|thumb|The engineers of the Seamen's Act, from left to right, maritime labor leader Andrew Furuseth, Senator Robert La Follette, and muckraker Lincoln Steffens, circa 1915]] Between 1915 and 1922, several laws were passed in the United States to strengthen the United States Merchant Marine and provide safeguards for its mariners.<ref name="des75">DeSombre 2006, p. 75.</ref> During this period, U.S.-flagged ships became subject to regular inspections undertaken by the American Bureau of Shipping.<ref name="des75"/> This was also the time of Robert LaFollette's Seamen's Act of 1915, which has been described as the "''Magna Carta'' of American sailors' rights".<ref name="Marquis 2007">{{cite web|last=Marquis |first=Greg |title=Brutality on Trial (review) |publisher=Law and Politics Book Review |year=2007 |url=http://www.bsos.umd.edu/gvpt/lpbr/subpages/reviews/gibson0107.htm |access-date=2010-05-25 |url-status=dead |archive-url=https://web.archive.org/web/20110607151726/http://www.bsos.umd.edu/gvpt/lpbr/subpages/reviews/gibson0107.htm |archive-date=2011-06-07 }}</ref> The Seamen's Act regulated mariners' working hours, their payment, and established baseline requirements for shipboard food.<ref name="Marquis 2007"/> It also reduced penalties for disobedience and abolished the practice of imprisoning sailors for the offense of desertion.<ref name="Marquis 2007"/> Another aspect of the Seamen's Act was enforcement of safety standards, with requirements on lifeboats, the number of qualified able seamen on board, and that officers and seamen be able to speak the same language.<ref name="Marquis 2007"/> These laws put U.S.-flagged vessels at an economic disadvantage against countries lacking such safeguards, and ships started to be re-registered in Panama's open registry from 1919.<ref name="des75"/> In addition to sidestepping the Seamen's Act, Panamanian-flagged ships in this early period paid sailors on the Japanese wage scale, which was much lower than that of western merchant powers.<ref name="des76"/> In the early phase of World War II the transfer of American-owned ships to the Panama registry was sanctioned by the United States government so that they could be used to deliver materials to Britain without dragging the United States, as a neutral, unintentionally into war.<ref>Langewiesche, William. The Outlaw Sea – a world of freedom, chaos, and crime. North Point Press. New York. 2004.</ref>

{| class="wikitable floatright" style="font-size:90%;width:22em;margin-left:1em" |+ Timeline ! Date !! Event |- | 1919 || m/v "Belen Quezada" flagged in Panama |- | 1948 || ITF FOC Campaign begins |- | 1949 || m/v "World Peace" flagged in Liberia |- | 1969 || Liberia becoming the largest registry |- | 1976 | FOC first mentioned in international convention (ILO C147)<ref>{{Cite web |last=International Labour Organisation |title=C147 - Merchant Shipping (Minimum Standards) Convention, 1976 (No. 147) |url=https://normlex.ilo.org/dyn/normlex/en/f?p=NORMLEXPUB:12100:0::NO:12100:P12100_INSTRUMENT_ID:312292:NO |access-date=2024-08-30 |website=Information System on International Labour Standards}}</ref> |- | 1988 || Marshall Islands starts own registry |- | 1999 || Panama is the largest registry |- | 2009 || Panama, Liberia & Marshall Islands account for 40% of world's tonnage |- | 2010 | Open registries addressed by IMO<ref name=":1" /> |} The Liberian open registry, founded in 1948,<ref>Information on the [http://www.globalsecurity.org/military/world/liberia/registry.htm Liberian Ship Registry], GlobalSecurity.org</ref> was the brainchild of Edward Stettinius, who had been Franklin D. Roosevelt's Secretary of State during World War II.<ref name="des74">DeSombre 2006, p. 74.</ref> Stettinius created a corporate structure that included The Liberia Corporation, a joint-venture with the government of Liberia.<ref name="des74"/> The corporation was structured so that 25% of its revenue would go to the Liberian government, another 10% went to fund social programs in Liberia, and the remainder returned to Stettinius' corporation.<ref name="des74"/> The Liberian registry was created at a time when Panama's registry was becoming less attractive for several reasons including its unpopularity with the U.S. labor movement and European shipping concerns, political unrest in Panama, and increases in its fees and regulations.<ref name="des74"/>

On 11 March 1949, Greek shipping magnate Stavros Niarchos registered the first ship under the Liberian flag, ''World Peace''. When Stettinius died in 1949, ownership of the registry passed to the International Bank of Washington, led by General George Olmsted.<ref name="gs">Pike, 2008.</ref> Within 18 years, Liberia grew to surpass the United Kingdom as the world's largest register.<ref name="gs"/>

Due to Liberia's 1989 and 1999 civil wars, its registry eventually fell second to Panama's flag of convenience, but maritime funds continued to supply 70% of its total government revenue.<ref name="gs"/> After the civil war of 1990, Liberia joined with the Republic of the Marshall Islands to develop a new maritime and corporate program.<ref name="gs"/> The resulting company, International Registries, was formed as a parent company, and in 1993 was bought out by its management.<ref name="gs"/> After taking over the Liberian government, Americo-Liberian warlord Charles Taylor signed a new registry contract with the Liberian International Ship and Corporate Registry, commonly known as LISCR. LISCR was one of the few legal sources of income for Taylor's regime.<ref name="gs"/> Liberia's registry is operated from Virginia, United States.{{citation needed|date=February 2018}}

To counteract ''class hopping'', in 2009 the International Association of Classification Societies (IACS) established a Transfer of Class Agreement (TOCA).<ref>{{Cite web |url=http://www.crs.hr/en-us/data/services/admissiontoclass.aspx |title=Transfer of class requirements — General |access-date=11 February 2018 |archive-date=12 February 2018 |archive-url=https://web.archive.org/web/20180212084746/http://www.crs.hr/en-us/data/services/admissiontoclass.aspx |url-status=dead }}</ref><ref>{{Cite web|url=http://www.iacs.org.uk/download/5766|title=Procedure for Transfer of Class|access-date=11 February 2018|archive-date=12 February 2018|archive-url=https://web.archive.org/web/20180212004958/http://www.iacs.org.uk/download/5766|url-status=dead}}</ref>

Ships of the Russian war-time shadow fleet transporting sanctioned cargo (especially crude oil) frequently change their flag registrations. Since 2022, this practice has given new importance in global shipping to previously insignificant registries like those of Gabon, Eswatini (itself landlocked with no open water access), the Comoro Islands, and Guinea-Bissau. According to a report of the Atlantic council "They are so permissive that virtually any vessel can register, even ones turned down by other flag-of-convenience-states."<ref>{{Cite web |last=Samoškaitė |first=Inga |date=2024-12-06 |title=The threats posed by the global shadow fleet—and how to stop it |url=https://www.atlanticcouncil.org/in-depth-research-reports/report/the-threats-posed-by-the-global-shadow-fleet-and-how-to-stop-it/ |access-date=2024-12-14 |website=Atlantic Council |language=en-US}}</ref> A May 2026 analysis of the US Treasury's Specially Designated Nationals (SDN) list found that of 1,445 OFAC-designated vessels with a recorded flag, 33.6% (486 vessels) fly classic flag-of-convenience registries — led by Panama (260 vessels), Liberia (63), and Palau (55) — while only 2.3% fly a flag from a transparent public beneficial-ownership register (the EU member states, the UK, Norway, or Iceland).<ref>{{cite web |url=https://sanctionslistservice.ofac.treas.gov/api/PublicationPreview/exports/SDN.CSV |title=Specially Designated Nationals (SDN) List |publisher=US Department of the Treasury, Office of Foreign Assets Control |date=19 May 2026 |access-date=24 May 2026}}</ref><ref>{{cite web |url=https://arcnautical.com/reports/dark-fleet-flag-brief/01/ |title=The Dark-Fleet Flag Brief — Issue 01 |publisher=ArcNautical |date=19 May 2026 |access-date=24 May 2026}}</ref>

{{As of|2025}}, the open registries of Panama, Liberia, and Marshall Islands accounted for approximately half of the entire world fleet by deadweight tonnage,<ref name="review">{{cite journal |date=23 January 2025 |title=Chapter 5: Maritime Transport |url=https://unctad.org/system/files/official-document/tdstat49_en.pdf |journal=Handbook of Statistics 2024 |publisher=UNCTAD}}</ref> maintaining roughly the same proportion for over a decade.<ref name=":0">{{Cite web |title=UNCTADstat |url=https://unctadstat.unctad.org/EN/Index.html |access-date=2022-11-11 |website=unctadstat.unctad.org}}</ref>

==Extent of use==  The International Transport Workers' Federation (ITF) is the biggest campaigner against FOC since 1948, and maintains a list of registries it considers to be flags of convenience.<ref>{{Cite web |title=Flags of Convenience |url=https://www.itfseafarers.org/en/resources/flags-convenience |publisher=ITF Seafarers |language=en}}</ref> In developing the list, the ITF takes into account "ability and willingness of the flag state to enforce international minimum social standards on its vessels," the "degree of ratification and enforcement of ILO Conventions and Recommendations," and "safety and environmental record". {{As of|2025|11}},<ref>{{cite web |title=New Flags of Convenience: Dominica, The Gambia, Niue |url=https://www.itfseafarers.org/en/news/new-flags-convenience-dominica-gambia-niue |publisher=ITF Seafarers |date=25 November 2025}}</ref> the list includes 48 registries.<ref name="itf-list">{{cite web |title=Current registries listed as FOCs |url=https://www.itfseafarers.org/en/issues/flags-of-convenience/current-registries-listed-focs |publisher=ITF Seafarers |location=London}}</ref>

{{As of|2009|since=y}}, Liberia, Panama and the Marshall Islands are the world's three largest registries in terms of deadweight tonnage (DWT).<ref>{{cite web |url=https://unctadstat.unctad.org/insights/theme/108 |title=Maritime and other transport |website=UNCTAD Data Hub}}</ref> {{As of|2024|1|1}}, these three nations registered 17,752 ships of {{DWT|1,000}} and above, for a total of {{DWT|1,041,986,000}}: more than 46% of the world's shipborne carrying capacity.<ref name="review" />

The following table gives the distribution between the 10 largest world registries in terms of tonnage (millions dwt): {| class="wikitable" ! Registry || FOC as per ITF || 2025 || 2024 || 2023 || 2022 || 2021 |- | {{flag|Liberia}} || {{ya}} || 424.1 || 408.7 || 378.6 || 335.7 || 299.8 |- | {{flag|Panama}} || {{ya}} || 371.3 || 380.9 || 366.7 || 350.9 || 344.6 |- | {{flag|Marshall Islands}} || {{ya}} || 305.5 || 308.6 || 299.9 || 290.3 || 274.3 |- | {{flag|Hong Kong}} || || 203.0 || 200.3 || 200.2 || 208.1 || 205.0 |- | {{flag|Singapore}} || || 152.3 || 140.7 || 134.8 || 131.7 || 136.3 |- | {{flag|China}} || || 137.1 || 139.7 || 133.2 || 120.5 || 111.0 |- | {{flag|Malta|civil}} || {{ya}} || 113.2 || 102.5 || 109.2 || 114.8 || 115.8 |- | {{flag|Bahamas|civil}} || {{ya}} || {{right|70.5}} || {{right|72.4}} || {{right|72.0}} || {{right|73.1}} || {{right|74.3}} |- | {{flag|Greece}} || || {{right|53.5}} || {{right|56.1}} || {{right|58.7}} || {{right|61.6}} || {{right|64.4}} |- | {{flag|Japan}} || || {{right|43.8}} || {{right|42.6}} || {{right|41.7}} || {{right|40.0}} || {{right|39.1}} |}

Source: UNCTAD (estimates based on data supplied by Clarkson Research Services). The data refer to the beginning of an indicated year.<ref>{{Cite web |title=Merchant fleet by flag of registration and by type of ship, annual (analytical) |url=https://unctadstat.unctad.org/datacentre/dataviewer/US.MerchantFleet |website=UNCTADstat Data Centre}}</ref>

In comparison, the total capacity of ships in the U.S. and U.K. registers as of 1 January 2024 is 13.2 mil. dwt and 11.1 mil. dwt respectively.

==Criticism== [[File:Deepwater Horizon offshore drilling unit on fire 2010.jpg|thumb|The drilling platform ''Deepwater Horizon'' flew a Marshallese flag of convenience.<ref>{{csr|register=ABS|id=0139290|shipname=Deepwater Horizon|access-date=2010-06-12}}</ref>]]There are a number of common threads found in criticisms of the flag of convenience system. One is that these flag states have insufficient regulations and that those regulations they do have are poorly enforced. Another is that, in many cases, the flag state cannot identify a shipowner, much less hold the owner civilly or criminally responsible for a ship's actions. As a result of this lack of flag state control, flags of convenience are criticized on grounds of enabling tax avoidance, providing an environment for conducting criminal activities, supporting terrorism, providing poor working conditions for seafarers, and having an adverse effect on the environment.

David Cockroft, former general secretary of the ITF, says:

{{blockquote|Arms smuggling, the ability to conceal large sums of money, trafficking in goods and people and other illegal activities can also thrive in the unregulated havens which the flag of convenience system provides.<ref name="neff07"/>}}

Panama has the largest maritime register, followed by Liberia. Landlocked Mongolia also has a major registry, as does Bolivia. Also, some registers are based in other countries. For example, Panamanian overseas consulates manage the documentation and collect registration fees, Liberia's registry is managed by a company in Virginia and Bahamas' from the City of London.<ref>Langewiesche, William. 2004. Ibid.</ref>

===Concealed ownership=== A ship's beneficial owner is legally and financially responsible for the ship and its activities.<ref name="oecd4">OECD 2003, p. 4.</ref> For any of a number of reasons, some justifiable and some suspicious, shipowners who wish to conceal their ownership may use a number of strategies to achieve that goal.

In jurisdictions that permit it, actual owners may establish shell corporations to be the legal owners of their ships,<ref name="danger20">Gianni 2008, p. 20.</ref> making it difficult, if not impossible, to track who is the beneficial owner of the ship. The 2004 Report of the UN Secretary General's Consultative Group on Flag State Implementation reported that "It is very easy, and comparatively inexpensive, to establish a complex web of corporate entities to provide very effective cover to the identities of beneficial owners who do not want to be known."<ref name="danger19">Gianni 2008, p. 19.</ref>

According to a 2003 report by the Organisation for Economic Co-operation and Development (OECD) report entitled "Ownership and Control of Ships", these corporate structures are often multi-layered, spread across numerous jurisdictions, and make the beneficial owner "almost impenetrable" to law enforcement officials and taxation.<ref name="danger20"/> The report concludes that "regardless of the reasons why the cloak of anonymity is made available, if it is provided it will also assist those who may wish to remain hidden because they engage in illegal or criminal activities, including terrorists."<ref name="danger20"/> The OECD report concludes that the use of bearer shares is "perhaps the single most important (and perhaps the most widely used) mechanism" to protect the anonymity of a ship's beneficial owner.<ref name="oecd8">OECD 2003, p. 8.</ref> Physically possessing a bearer share accords ownership of the corporation.<ref name="oecd8"/> There is no requirement for reporting the transfer of bearer shares, and not every jurisdiction requires that their serial numbers even be recorded.<ref name="oecd8"/>

Two similar techniques to provide anonymity for a ship's beneficial owner are "nominee shareholders" and "nominee directors". In some jurisdictions that require shareholder identities to be reported, a loophole may exist where the beneficial owner may appoint a nominee to be the shareholder, and that nominee cannot legally be compelled to reveal the identity of the beneficial owner.<ref name="oecd8-9">OECD 2003, pp. 8–9.</ref> All corporations are required to have at least one director, however many jurisdictions allow this to be a nominee director.<ref name="oecd9">OECD 2009, p. 9.</ref> A nominee director's name would appear on all corporate paperwork in place of the beneficial owners, and like nominee shareholders, few jurisdictions can compel a nominee director to divulge the identity of beneficial owners.<ref name="oecd9"/> A further hurdle is that some jurisdictions allow a corporation to be named as a director.<ref name="oecd9"/>

===Crime=== Flag of convenience ships have long been linked to crime on the high seas. For example, in 1982, Honduras shut down its open registry operations because it had enabled "illegal traffic of all kinds and had given Honduras a bad name".<ref name="reuters1982">Reuters, 1982.</ref>

Ships registered by the Cambodia Shipping Corporation (CSC) were found smuggling drugs and cigarettes in Europe, breaking the Iraq oil embargo, and engaging in human trafficking and prostitution in Europe and Asia.<ref name="neff07"/> In response to these activities, in 2000, Ahmad Yahya of the Cambodian Ministry of Public Works and Transport told industry publication ''Fairplay'' "We don't know or care who owns the ships or whether they're doing 'white' or 'black' business ... it is not our concern."<ref name="neff07"/> Less than two years later, French forces seized the Cambodian-flagged, Greek-owned MV ''Winner'' for cocaine smuggling.<ref name="neff07"/> Shortly after the seizure, Cambodian Prime Minister Hun Sen closed the registry to foreign ships,<ref name="neff07"/> and Cambodia canceled its contract with CSC shortly thereafter.<ref name="brooke04">Brooke, 2004.</ref>

The North Korean flag of convenience has also garnered significant scrutiny. In 2003, the North Korean freighter ''Pong Su'' reflagged to Tuvalu in the middle of a voyage shortly before being seized by Australian authorities for smuggling heroin into that country.<ref name="neff07"/> That year, thirteen nations began monitoring vessels under the North Korean flag for "illicit cargos like drugs, missiles or nuclear weapon fuel".<ref name="brooke04"/> Following the US 2018 withdrawal from the Joint Comprehensive Plan of Action, Iran's ghost fleet is known to use flag hopping in order to smuggle oil out of the country.<ref>{{Cite web |date=2023-09-29 |title=The Ghost Armada |url=https://www.unitedagainstnucleariran.com/blog/stop-hop-ii-ghost-armada-grows |access-date=2025-04-15 |website=UANI |language=en}}</ref>

===Working conditions=== In the accompanying material of the ILO's Maritime Labour Convention of 2006, the International Labour Organization estimated that at that time there were approximately 1,200,000 working seafarers across the world.<ref name="mlo-faq5">International Labour Organization, "Maritime Labour Convention 2006, Frequently Asked Questions", p. 5.</ref> This document goes on to say that when working aboard ships flagged to states that do not "exercise effective jurisdiction and control" over their ships that "seafarers often have to work under unacceptable conditions, to the detriment of their well-being, health and safety and the safety of the ships on which they work."<ref name="mlo-faq4-5">International Labour Organization, "Maritime Labour Convention 2006, Frequently Asked Questions", pp. 4–5.</ref>

The International Transport Workers' Federation goes further, stating that flags of convenience "provide a means of avoiding labor regulation in the country of ownership, and become a vehicle for paying low wages and forcing long hours of work and unsafe working conditions. Since FOC ships have no real nationality, they are beyond the reach of any single national seafarers' trade union."<ref name="campaign">{{cite web |url=http://www.itfglobal.org/flags-convenience/index.cfm |title=Flags of Convenience campaign |access-date=2007-05-04 |work=International Transport Workers' Federation |archive-url=https://web.archive.org/web/20051212221704/http://www.itfglobal.org/flags-convenience/index.cfm |archive-date=2005-12-12 |url-status=dead }}</ref> They also say that these ships have low safety standards and no construction requirements, that they "do not enforce safety standards, minimum social standards or trade union rights for seafarers",<ref>[http://www.parismou.org/upload/anrep/BGWlist2006-2008.pdf What do FOC's mean to seafarers?] International Transport Workers' Federation {{webarchive |url=https://web.archive.org/web/20090611215051/http://www.parismou.org/upload/anrep/BGWlist2006-2008.pdf |date=11 June 2009 }}</ref> that they frequently fail to pay their crews,<ref name="working99"/> have poor safety records,<ref name="working99"/> and engage in practices such as abandoning crewmen in distant ports.<ref name="working99"/>

===Environmental effects=== While flag of convenience ships have been involved with some of the highest-profile oil spills in history (such as the Maltese-flagged {{MV|Erika}},<ref name="erika">{{cite web |url=http://www.cedre.fr/en/spill/erika/erika.php |title=Erika |date=November 2009 |publisher=Centre of Documentation, Research and Experimentation on Accidental Water Pollution |location=Brest |access-date=2010-06-30}}</ref> the Bahamian-flagged {{MV|Prestige}},<ref name="prestige">{{cite web |url=http://www.cedre.fr/en/spill/prestige/prestige.php |title=Prestige (CEDRE) |date=April 2006 |publisher=Centre of Documentation, Research and Experimentation on Accidental Water Pollution |location=Brest |access-date=2010-06-30}}</ref> the Marshallese-flagged ''Deepwater Horizon'',<ref name="deepwater_horizon">{{cite web |url=http://www.cedre.fr/en/spill/deepwater_horizon/deepwater_horizon.php |title=Deepwater Horizon |date= June 2010 |publisher=Centre of Documentation, Research and Experimentation on Accidental Water Pollution |location=Brest |access-date=2010-06-30}}</ref> and the Liberian-flagged {{SS|Torrey Canyon}}, {{MV|Amoco Cadiz}}<ref name="amoco">{{cite web |url=http://www.cedre.fr/en/spill/amoco/amoco.php |title=Amoco Cadiz |date=April 2006 |publisher=Centre of Documentation, Research and Experimentation on Accidental Water Pollution |location=Brest |access-date=30 June 2010}}</ref> and {{MV|Sea Empress}}<ref name="sea_empress">{{cite web |url=http://www.cedre.fr/en/spill/sea_emp/sea_empress.php |title=Sea Empress |date=April 2006 |publisher=Centre of Documentation, Research and Experimentation on Accidental Water Pollution |location=Brest |access-date=30 June 2010}}</ref>), the most common environmental criticism they face regards illegal fishing. These critics of the flag of convenience system argue that many of the FOC flag states lack the resources or the will to properly monitor and control those vessels. The Environmental Justice Foundation (EJF) contends that illegal, unreported and unregulated fishing (IUU) vessels use flags of convenience to avoid fisheries regulations and controls. Flags of convenience help reduce the operating costs associated with illegal fishing methods, and help illegal operators avoid prosecution and hide beneficial ownership.<ref>Gianni & Simpson, 2005.</ref> As a result, flags of convenience perpetuate IUU fishing which has extensive environmental, social and economic impacts, particularly in developing countries.<ref>Environmental Justice Foundation, 2009.</ref> The EJF is campaigning to end the granting of flags of convenience to fishing vessels as an effective measure to combat IUU fishing.

According to Franz Fischler, European Union Fisheries Commissioner,

{{blockquote|The practice of flags of convenience, where owners register vessels in countries other than their own in order to avoid binding regulations or controls, is a serious menace to today's maritime world.<ref>ICFTU et al., 2002. Page 5.</ref>}}

==Port state control== {{main|Port state control}}

In 1978, a number of European countries agreed in The Hague to audit labour conditions on board vessels ''vis-a-vis'' the rules of the International Labour Organization. To this end, in 1982 the "Paris Memorandum of Understanding on Port State Control" (Paris MOU) was established, setting port state control standards for what is now twenty-six European countries and Canada.

Several other regional Memoranda of Understanding have been established based on the Paris model, including the "Memorandum of Understanding on Port State Control in the Asia-Pacific Region", typically referred to as the "Tokyo MOU",<ref>{{Cite web |title=Memorandum of Understanding on Port State Control in the Asia-Pacific |url=https://www.tokyo-mou.org/about/memorandum/ |website=Tokyo MoU}}</ref> and organizations for the Black Sea, the Caribbean, the Indian Ocean, the Mediterranean, and Latin America. The Tokyo and Paris organizations generate, based on deficiencies and detentions, black-, white-, and grey-lists of flag states. The US Coast Guard, which handles port state control inspections in the US, maintains a similar target list for underperforming flag states.<ref name=":2" />

{| class="wikitable" |+PSC performance indicators (2025) !FOC as per ITF !% of world's tonnage<ref name="review" /> !Paris MoU !Tokyo MoU !USCG Qualship 21 |- |{{flag|Liberia}} |{{center|17.4%}} || {{ya|text=White list}} || {{ya|text=White list}} || {{na}} |- |{{flag|Panama}} |{{center|15.2%}} || {{not yet|Grey list}} || {{ya|text=White list}} || {{na}} |- |{{flag|Marshall Islands}} |{{center|12.5%}} || {{ya|text=White list}} || {{ya|text=White list}} || {{ya}} |- |{{flag|Malta|civil}} |{{center|4.6%}} || {{ya|text=White list}} || {{ya|text=White list}} || {{ya}} |- |{{flag|Bahamas|civil}} |{{center|2.9%}} || {{ya|text=White list}} || {{ya|text=White list}} || {{na}} |- |{{flag|Cyprus}} |{{center|1.4%}} || {{ya|text=White list}} || {{ya|text=White list}} || {{na}} |- |{{flag|Barbados}} |{{center|0.8%}} || {{ya|text=White list}} || {{not yet|Grey list}} || {{ya}} |- |{{flag|Antigua and Barbuda}} |{{center|0.4%}} || {{ya|text=White list}} || {{not yet|Grey list}} || {{na}} |- |{{flag|Palau}} |{{center|0.3%}} || {{Black Exempt|Black list}} || {{Black Exempt|Black list}} || {{na}} |- |{{flag|Bermuda}} |{{center|0.3%}} || {{ya|text=White list}} || {{ya|text=White list}} || {{ya}} |- |{{flag|Cameroon}} |{{center|0.2%}} || {{Black Exempt|Black list}} || {{Black Exempt|Black list}} || {{na}} |- |{{flag|Cayman Islands|civil}} |{{center|0.2%}} || {{ya|text=White list}} || {{ya|text=White list}} || {{ya}} |- |all other FOCs |{{center|< 3%}} || {{n/a}} || {{n/a}} || {{n/a}} |} Sources: International Chamber of Shipping (ICS)<ref name=":3">{{Cite web |last=International Chamber of Shipping |title=2024/2025 Flag State Performance Table |url=https://www.ics-shipping.org/wp-content/uploads/2025/02/Shipping-Industry-Flag-State-Performance-Table-2024-2025.pdf |date=February 2025 |publisher=Marisec Publications }}</ref>, Paris MoU<ref>{{Cite web |title=White, Grey and Black List {{!}} Period: 07-2025 / 06-2026 |url=https://parismou.org/Statistics&Current-Lists/white-grey-and-black-list |website=Paris MoU}}</ref>, Tokyo MoU<ref>{{Cite web |title=Annual Report on Port State Control in the Asia-Pacific Region − 2024 {{!}} BLACK – GREY – WHITE LISTS |url=https://www.tokyo-mou.org/wp/wp-content/uploads/ANN24-1.pdf |website=Tokyo MoU |pages=41–42 |language=en }}</ref>, USCG<ref name=":2">{{Cite web |title=Qualship 21 Initiative {{!}} 7/2025 – 6/2026 |url=https://www.dco.uscg.mil/Our-Organization/Assistant-Commandant-for-Prevention-Policy-CG-5P/Inspections-Compliance-CG-5PC-/Commercial-Vessel-Compliance/Foreign-Offshore-Compliance-Division/Port-State-Control/QS21/ |website=United States Coast Guard}}</ref>

Both Paris and Tokyo MoU-s maintain blacklists of low performing flags, but there are FOC and non-FOC registries among them.

Panama has a policy to reduce PSC detentions and to improve performance on Panamanian vessels.<ref>{{Cite web |last=Panama Maritime Authority |title=Measurements to Reduce PSC Detentions and improve the performance on Panamanian Vessels. |url=https://www.panamashipregistry.com/document/measurements-to-reduce-psc-detentions-and-improve-the-performance-on-panamanian-vessels/ |access-date=2024-08-29 |website=Panama Maritime Authority}}</ref>

The effectiveness of the port state control regime in correcting deficiencies is mitigated in some part by the practice of flag-hopping, in which shipowners and operators will rename their ships and acquire new vessel registrations in other jurisdictions in order to avoid detection and reduce the likelihood of being selected for port state control inspections.<ref>{{Cite journal| issn=0022-5258| volume=45| issue=2| pages=155–177| last1=Cariou| first1=Pierre| last2=Wolff| first2=François-Charles| title=Do Port State Control Inspections Influence Flag- and Class-hopping Phenomena in Shipping?| journal=Journal of Transport Economics and Policy| date=2011| jstor=23072173}}</ref>

==Ratification of maritime conventions== International regulations for the maritime industry are promulgated by agencies of the United Nations, particularly the International Maritime Organization and International Labour Organization. Flag states adopt these regulations for their ships by ratifying individual treaties. One common criticism against flags of convenience was that they allow shipowners to avoid these regulations by not ratifying important treaties or by failing to enforce them. Recent surveys (table on right side) shows that major FOC administrations comply with the international conventions. Only small percent of FOC tonnage belongs to flags, which are out of this process.

The International Chamber of Shipping (ICS) issues an annual report entitled the ''Shipping Industry Flag State Performance Table''<ref name=":3" /> identifying the six "core" conventions representing a minimum level of maritime regulation, from the viewpoint of shipowners, as SOLAS, MARPOL, LL 66, STCW, MLC, and CLC/FUND92. With the exception of Eswatini, all 48 flags of convenience listed by ITF have ratified the STCW Convention, concerning standards of training, certification and watchkeeping for seafarers, and 23 of them have ratified all six. However, at least seventeen listed countries have not ratified all the remaining five conventions. To put this in context, over 50 flag states have not ratified all six conventions, including China and United States of America.

The Safety of Life at Sea (SOLAS) and Load Line (LL 66) conventions focus on shipboard safety issues. Originally developed in response to the sinking of RMS ''Titanic'', SOLAS sets regulations on lifeboats, emergency equipment and safety procedures, including continuous radio watches. It has been updated to include regulations on ship construction, fire protection systems, life-saving appliances, radio communications, safety of navigation, management for the safe operation of ships, and other safety and security concerns.<ref name="solas">{{cite web|url=http://www.imo.org/Conventions/contents.asp?topic_id=257&doc_id=647 |title=International Convention for the Safety of Life at Sea |publisher=International Maritime Organization |access-date=2010-07-01 |archive-url=https://web.archive.org/web/20100422143946/http://www.imo.org/Conventions/contents.asp?topic_id=257&doc_id=647 |archive-date=2010-04-22 |url-status=dead }}</ref> LL 66 sets standards for minimum buoyancy, hull stress, and ship's fittings, as well as establishing navigational zones where extra precautions must be taken.<ref name="ll66">{{cite web |url=http://www.imo.org/conventions/mainframe.asp?topic_id=254 |archive-url=http://arquivo.pt/wayback/20090707061107/http://www.imo.org/Conventions/mainframe.asp?topic_id=254 |url-status=dead |archive-date=2009-07-07 |title=International Convention on Load Lines, 1966 |publisher=International Maritime Organization |access-date=2010-07-01}}</ref>

The International Labour Organization Maritime Labour Convention, 2006 provides comprehensive rights and protection at work for seafarers, including requirements for minimum age, qualifications, hours of work and rest, medical care, complaint procedures, wage payments, and onboard living arrangements.<ref name="mlcdnv">{{cite web |url=http://www.dnv.com/industry/maritime/servicessolutions/statutoryservices/mlc/who_needs_to_be_certified.asp |archive-url=https://archive.today/20130901074222/http://www.dnv.com/industry/maritime/servicessolutions/statutoryservices/mlc/who_needs_to_be_certified.asp |url-status=dead |archive-date=2013-09-01 |title=Who Needs to be Inspected and Certified |publisher=Det Norske Veritas |access-date=2013-09-02 }}</ref> The MLC replaced a number of earlier ILO Conventions including ILO147.<ref name="mlctext">{{cite web |url=http://www.ilo.org/dyn/normlex/en/f?p=1000:12100:0::NO::P12100_ILO_CODE:C186 |title=Text of MLC Convention|publisher=International Labour Organization|access-date=2013-09-02}}</ref>

MARPOL and CLC/FUND92 relate to pollution. The International Convention for the Prevention of Pollution from Ships, 1973 (MARPOL), as modified by the Protocol of 1978, including Annexes I–VI" regulates pollution by ships, including oil and air pollution, shipboard sewage and garbage.<ref name="marpol">{{cite web |url=http://www.imo.org/Conventions/mainframe.asp?topic_id=258&doc_id=678 |archive-url=http://arquivo.pt/wayback/20091014024037/http%3A//www%2Eimo%2Eorg/Conventions/mainframe%2Easp?topic_id%3D258%26doc_id%3D678 |archive-date=14 October 2009 |title=International Convention for the Prevention of Pollution from Ships, 1973, as modified by the Protocol of 1978 relating thereto (MARPOL 73/78) |publisher=International Maritime Organization |access-date=2010-07-01 |url-status=dead }}</ref> The Civil Liability for Oil Pollution Damage (CLC) and International Fund for Compensation for Oil Pollution Damage (FUND92) together provide mechanisms to ensure compensation for victims of oil spills.<ref name="clc">{{cite web |url=http://www.imo.org/conventions/contents.asp?doc_id=660&topic_id=256#4 |archive-url=http://arquivo.pt/wayback/20090707124805/http://www.imo.org/Conventions/contents.asp?doc_id=660&topic_id=256 |url-status=dead |archive-date=2009-07-07 |title=International Convention on Civil Liability for Oil Pollution Damage (CLC), 1969 |publisher=International Maritime Organization |access-date=2010-07-01}}</ref><ref name="fund">{{cite web |url=http://www.imo.org/Conventions/contents.asp?doc_id=661&topic_id=256 |archive-url=http://arquivo.pt/wayback/20090707130551/http://www.imo.org/Conventions/contents.asp?topic_id=256&doc_id=661 |url-status=dead |archive-date=2009-07-07 |title=International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage (FUND), 1971 |publisher=International Maritime Organization |access-date=2010-07-02}}</ref>

With the exception of Cameroon, each of the top twelve FOC registries by tonnage (see '''Port state control''') are signatories to the major revisions of all six core maritime conventions.<ref name="review" /><ref name=":3" /><ref>{{Cite web |title=Status of Conventions |url=https://www.imo.org/en/About/Conventions/Pages/StatusofConventions.aspx |access-date=2024-09-02 |website=www.imo.org}}</ref><ref>{{Cite web |last=ILO |title=MLC, 2006 - Maritime Labour Convention, 2006 (MLC, 2006) |url=https://normlex.ilo.org/dyn/normlex/en/f?p=NORMLEXPUB:80001:0::NO:::}}</ref>

==Wages== The United Nations Conference on Trade and Development, in its 2009 ''Report on Maritime Trade'', states that shipowners often register their ships under a foreign flag in order to employ "seafarers from developing countries with lower wages".<ref name="review-2">{{cite journal | title=Chapter 2, Structure and ownership of the world fleet | journal=Review of Maritime Transport | page=57 | publisher=UNCTAD | date=December 2009 | access-date=2010-08-15 | url=http://www.unctad.org/en/docs/rmt2009_en.pdf | archive-date=1 July 2010 | archive-url=https://web.archive.org/web/20100701082902/http://www.unctad.org/en/docs/rmt2009_en.pdf | url-status=dead }}</ref> The Philippines and China supply a large percentage of maritime labor in general,<ref name="num-seafarers">{{cite web |url=http://www.marisec.org/shippingfacts/worldtrade/world-seafarers.php |title=Shipping and World Trade: Numbers and nationality of world's seafarers |year=2005 |website=Shipping Facts |publisher=Maritime International Secretariat Services |location=London |url-status=usurped |archive-url=https://web.archive.org/web/20080318124946/http://www.marisec.org/shippingfacts/worldtrade/world-seafarers.php |archive-date=18 March 2008}}</ref> and major flags of convenience in particular. In 2009, the flag-states employing the highest number of expatriate-Filipino seafarers were Panama, the Bahamas, Liberia and the Marshall Islands.<ref name="poea">{{cite web|url=http://www.poea.gov.ph/stats/2009_OFW%20Statistics.pdf|title=Overseas Employment Statistics|publisher=Philippine Overseas Employment Administration|year=2009 |location=Mandaluyong, Philippines|page=28|url-status=dead|archive-url=https://web.archive.org/web/20100922233506/http://www.poea.gov.ph/stats/2009_OFW%20Statistics.pdf|archive-date=2010-09-22}}</ref> That year, more than 150,000 Filipino sailors were employed by these four flags of convenience.<ref name="poea"/> In a 2006 study by the United States Maritime Administration (MARAD), sailors from the People's Republic of China comprised over 40% of the crews on surveyed ships flying the Panamanian flag, and around 10% of those flying the Liberian flag.<ref name="marad-14">Maritime Administration, 2006, p. 14.</ref> The MARAD report referred to both China and the Philippines as "low cost" crewing sources.<ref name="marad-1314">Maritime Administration, 2006, p. 13-14.</ref>

The seafaring industry is often divided into two employment groups: licensed mariners including deck officers and marine engineers, and mariners that are not required to have licenses, such as able seamen and cooks, but are required to be certified. The latter group is collectively known as unlicensed mariners or ratings. Differences in wages can be seen in both groups, between "high cost" crewing sources such as the United States, and "low cost" sources such as China and The Philippines. However, salaries on flag of convenience ships are still far higher than median salaries of non-seafarers in these countries,<ref>{{cite web |publisher=Technical Education And Skills Development Authority, Government of the Philippines |title=Labor Market Intelligence Report: Highlights of the Wage and Salary and Wage Rates in Industries |url=http://www.tesda.gov.ph/uploads/File/LMIR2011/dec/Highlights%20of%20the%20Wage%20Workers.pdf |access-date=6 November 2014}}</ref> in addition to income tax exemption of some seamen,<ref>{{cite web |url=http://seafarersplace.blogspot.com/2014/08/ofw-filipino-seafarers-tax-exemption.html |title= OFW – Filipino Seafarer's Tax Exemption |date= 15 August 2014 |access-date=24 January 2016}}</ref> particularly those from the Philippines.

For unlicensed mariners, 2009 statistics from the American Bureau of Labor Statistics give median earnings for able and ordinary seamen as US$35,810, varying from $21,640 (at the 10th percentile) to $55,360 (at the 90th percentile).<ref name="bls-seaman">{{cite web|url=http://www.bls.gov/oes/2009/may/oes535011.htm |title=Sailors and Marine Oilers |publisher=Bureau of Labor Statistics |date=2010-05-14 |access-date=2010-07-02}}</ref> This can be compared with 2006 statistics from the International Labour Organization, giving average yearly earnings for Filipino and Chinese able seamen around $2,000 to $3,000 per year (PHP9,900 per month and CNY3,071 per year).<ref name="laborsta-china">From {{cite web |url=http://laborsta.ilo.org/ |title=LABORSTA |year=2006 |publisher=International Labour Office Department of Statistics |location=Geneva |access-date=2010-07-01 |archive-date=19 July 2010 |archive-url=https://web.archive.org/web/20100719030641/http://laborsta.ilo.org/ |url-status=dead }}. Expand "Wages" tab. Select "Wages and hours of work in 159 occupations." Select "China" and click "Go." Click "view." Data under "Able seaman".</ref><ref name="laborsta-phil"/> Among licensed mariners, American chief engineers earned a median $63,630, varying from $35,030 to $109,310 while their Filipino counterparts averaged $5,500 per year (PHP21,342 per month).<ref name="laborsta-phil">From {{cite web |url=http://laborsta.ilo.org/ |title=LABORSTA |year=2006 |publisher=International Labour Office Department of Statistics |location=Geneva |access-date=2010-07-01 |archive-date=19 July 2010 |archive-url=https://web.archive.org/web/20100719030641/http://laborsta.ilo.org/ |url-status=dead }}. Expand "Wages" tab. Select "Wages and hours of work in 159 occupations." Select "Philippines" and click "Go." Click "view." Data under "Ship's chief engineer" and "Able seaman".</ref><ref name="bls-officer">{{cite web|url=http://www.bls.gov/oes/2009/may/oes535031.htm |title=Ship Engineers |publisher=Bureau of Labor Statistics |date=2010-05-14 |access-date=2010-07-02}}</ref>

==Footnotes== {{reflist}}

==References== {{refbegin|colwidth=30em}} * {{cite book | last=Bernaert | first=Andy | title=Bernaerts' Guide to the 1982 United Nations Convention on the Law of the Sea | url=https://books.google.com/books?id=F0z8Z3zZEh8C&q=flag-state%20%22flag%20of%20convenience%22&pg=PA104 | access-date=2010-08-14 | orig-year=1988 | year=2006 | publisher=Trafford Publishing | location=Victoria, B.C., Canada | isbn=978-1-4120-7665-4 }} * {{cite book|last=D'Andrea|first=Ariella|title=The "Genuine Link" Concept in Responsible Fisheries|trans-title=Legal Aspects and Recent Developments|url=http://www.fao.org/3/bb094e/bb094e.pdf|access-date=2021-03-27|series=FAO Legal Papers Online|volume=61|date=November 2006|publisher=Food and Agriculture Organization|location=Rome}} * {{cite book | author=De Kleer, Vicki | title=Flags of the World: A Visual Guide To The | url=https://archive.org/details/visualguidetofla00dekl | url-access=registration | page=[https://archive.org/details/visualguidetofla00dekl/page/37 37] | quote=civil ensign. | publisher=Chatham Publishing | location=London | year=2007 | isbn=978-1-86176-305-1 | access-date=2010-08-14}} * {{cite book |title=The American Heritage Dictionary of the English Language, Fourth Edition |publisher=Houghton Mifflin Harcourt |location=Boston |isbn=978-0-395-82517-4 |url=https://archive.org/details/americanheritage0000unse_a1o7 |access-date=2010-08-14 |year=2000 }} * {{cite journal | author = Dempsey, P.S. |author2=Helling, L.L. | date = 1 September 1980 | title = Oil pollution by ocean vessels – an environmental tragedy: the legal regime of flags of convenience, multilateral conventions, and coastal states | journal = Denver Journal of International Law and Policy | volume = 10 | issue = 1 | pages = 37–87| osti = 6339199 }} * {{cite book |title=Flagging Standards : Globalization and Environmental, Safety, and Labor Regulations at Sea |last=DeSombre |first=Elizabeth |year=2006|publisher=MIT Press |location=Cambridge, MA |isbn=978-0-262-54190-9 |url=https://books.google.com/books?id=MRe0ig0-nO8C&q=%22Belen%20Quezada%22%20%2BPanama&pg=PA76 |access-date=2010-06-13}} * {{cite web |url=http://assets.panda.org/downloads/flag_state_performance.pdf |title=Real and Present Danger: Flag State Failure and Maritime Security and Safety |author=Gianni, Matthew |year=2008 |location=Oslo & London|publisher=International Transport Worker's Federation |access-date=2010-06-24}} * {{cite book |title=More Troubled Waters: Fishing, Pollution, and FOCs |publisher=International Confederation of Free Trade Unions, Trade Union Advisory Committee to the OECD, International Transport Workers' Federation, Greenpeace International, 2002 World Summit on Sustainable Development |location=Johannesburg |year=2002 |url=http://www.itfglobal.org/infocentre/pubs.cfm/detail/24668 |archive-url=https://web.archive.org/web/20110927071443/http://www.itfglobal.org/infocentre/pubs.cfm/detail/24668 |url-status=dead |archive-date=2011-09-27 |access-date=2011-08-14 }} * {{cite book |title=FAQ regarding the Consolidated Maritime Convention of 2006 |year=2006 |publisher=International Labour Organization |location=Geneva |isbn=978-92-2-118643-4 |url=http://www.ilo.org/wcmsp5/groups/public/---ed_norm/---normes/documents/publication/wcms_088042.pdf |access-date=2010-06-12}} * {{cite web |url=http://www.marad.dot.gov/documents/Crewing_Report_Internet_Version_in_Word-update-Jan_final.pdf|title=A Review of Crewing Practices in U.S.-Foreign Ocean Cargo Shipping |publisher=United States Maritime Administration |date=November 2006 |location=Washington, D.C.|page=9|access-date=2010-08-15|archive-url=https://web.archive.org/web/20100707053529/http://www.marad.dot.gov/documents/Crewing_Report_Internet_Version_in_Word-update-Jan_final.pdf|archive-date=2010-07-07|url-status=dead}} * {{cite web|url=http://www.oecd.org/dataoecd/53/9/17846120.pdf|title=Ownership and Control of Ships|author=Maritime Transport Committee|year=2003|work=Directorate for Science, Technology and Industry|publisher=Organisation for Economic Co-operation and Development|location=Paris|archive-url=https://web.archive.org/web/20040728191545/http://www.oecd.org/dataoecd/53/9/17846120.pdf|archive-date=2004-07-28|access-date=2010-06-25|url-status=dead}} * {{cite book |title=Merriam-Webster's collegiate dictionary |publisher=Merriam-Webster, Inc |location=Springfield, Massachusetts |year=2003 |url=https://books.google.com/books?id=TAnheeIPcAEC&q=%22registry%20of%20a%20merchant%20ship%20under%20a%20foreign%20flag%20in%20order%20to%20profit%20from%20less%20restrictive%20regulations%22&pg=RA1-PA474|isbn=978-0-87779-808-8 |access-date=2010-08-14}} * {{cite book |title=The Oxford Companion to Ships and the Sea |last=Kemp |first=Peter |year=1976 |publisher=Oxford University Press |location=London |isbn=978-0-19-282084-6 |url=https://archive.org/details/oxfordcompaniont00kemp |access-date=2010-06-13 |url-access=registration }} * {{cite web |url=http://www.itfglobal.org/flags-convenience/sub-page.cfm |title=What are Flags of Convenience? |access-date=2007-05-04 |publisher=International Transport Workers' Federation |archive-url=https://web.archive.org/web/20070518030233/http://www.itfglobal.org/flags-convenience/sub-page.cfm |archive-date=2007-05-18 |url-status=dead }} * {{cite web|url=http://www.itfglobal.org/flags-convenience/flags-convenien-183.cfm |title=FOC Countries |access-date=2007-05-04 |publisher=International Transport Workers' Federation |archive-url=https://web.archive.org/web/20100718210353/http://www.itfglobal.org/flags-convenience/flags-convenien-183.cfm |archive-date=2010-07-18 |url-status=dead }} * {{cite web|url=http://www2.unitar.org/hiroshima/programmes/shs04/Presentations%20SHS/7%20July/Hamzah_doc.pdf |title=Ports and Sustainable Development: Initial Thoughts |access-date=2007-05-07 |author=Hamzah, B.A. |date=7 July 2004 |publisher=United Nations Institute for Training and Research |page=4 |archive-url=https://web.archive.org/web/20070614152932/http://www.unitar.org/hiroshima/programmes/shs04/Presentations%20SHS/7%20July/Hamzah_doc.pdf |archive-date=14 June 2007 |url-status=dead }} * {{cite book |title=Foreign Flag Crewing Practices |publisher=Maritime Administration, U.D. Department of Transportation |year=2006 |location=Washington, D.C. |url=http://www.marad.dot.gov/documents/Crewing_Report_Internet_Version_in_Word-update-Jan_final.pdf |access-date=2010-06-12 |archive-url=https://web.archive.org/web/20100527165830/http://www.marad.dot.gov/documents/Crewing_Report_Internet_Version_in_Word-update-Jan_final.pdf |archive-date=2010-05-27 |url-status=dead }} * {{cite web|url=http://www.globalsecurity.org/military/world/liberia/registry.htm|title=History of Liberian Ship Registry|access-date = 2010-06-20|last=Pike|first=John|year=2008|publisher=GlobalSecurity.org}} * {{cite web |url=http://yaleglobal.yale.edu/content/crimes-under-flags-convenience |title=Crimes Under Flags of Convenience |first=Michael |last=Richardson |year=2003 |work=YaleGlobal Online |publisher=Yale Center for the Study of Globalization |location=New Haven, Connecticut |access-date=2010-08-25 }} * {{cite web |url=https://www.un.org/Depts/los/convention_agreements/texts/unclos/part7.htm |title=Part VII: The High Seas |year=1982 |work=United Nations Convention on the Law of the Sea (UNCLOS) |publisher=United Nations |access-date=2010-06-14}} * {{cite book |last1=Wiswall |first1=Frank Jr. |editor1-first=William |editor1-last=Lovett |title=United States Shipping Policies and the World Market |chapter-url=https://books.google.com/books?id=2gXpKzu1wz4C&q=United%20States%20shipping%20policies%20and%20the%20world%20market&pg=PP4 |year=1996 |publisher=Quorum |location=Westport, Conn. |isbn=978-0-89930-945-3 |chapter=Flags of Convenience }} {{refend}}

===News stories=== {{refbegin}} * {{cite web |url=http://www.globalpolicy.org/nations/flags/2004/0702landlocked.htm |title=Landlocked Mongolia's Seafaring Tradition |author=Brooke, James |date=2 July 2004 |work=New York Times |access-date=12 June 2010}} * {{cite news |date=16 May 2002 |title=Brassed Off: How the war on terrorism could change the shape of shipping |newspaper=The Economist |url=http://www.globalpolicy.org/nations/flags/2002/0520osama.htm}} * {{cite journal |last1=Fleshman |first1=Michael |year=2001 |title=Conflict diamonds evade UN sanctions: Improvements in Sierra Leone, but continuing violations in Angola and Liberia |journal=Africa Recovery |publisher=United Nations |volume=15 |issue=4 |page=15 |url=https://www.un.org/ecosocdev/geninfo/afrec/vol15no4/154diam.htm}} * {{cite news |ref=RN07 |url=http://www.atimes.com/atimes/Korea/ID20Dg03.html |archive-url=https://web.archive.org/web/20070427162111/http://atimes.com/atimes/Korea/ID20Dg03.html |url-status=dead |archive-date=2007-04-27 |title=Flags That Hide the Dirty Truth |last=Neff |first=Robert |date=2007-04-20 |work=Asia Times |access-date=2010-06-12}} * {{cite news |url=https://www.nytimes.com/1982/11/09/world/honduras-cuts-ship-registry.html |title=Honduras Cuts Ship Registry |agency=Reuters |date=9 November 1982 |ref=NYT82 |newspaper=New York Times |access-date=12 June 2010}} * {{cite news |last=Working |first=Russell |date=22 May 1999 |title=Flags of Inconvenience; Union Campaigns Against Some Foreign Ship Registry |newspaper=The New York Times |url=http://www.globalpolicy.org/nations/union99.htm |access-date=2007-05-04}} {{refend}}

===Fishing references=== {{refbegin}} * {{cite book |title=Lowering The Flag: Ending the Use of Flags of Convenience by Pirate Fishing Vessels |publisher=Environmental Justice Foundation |location=London |isbn=978-1-904523-19-2 |url=http://www.illegal-fishing.info/uploads/Loweringtheflagfinal.pdf |archive-url=https://web.archive.org/web/20110721210559/http://www.illegal-fishing.info/uploads/Loweringtheflagfinal.pdf |url-status=dead |archive-date=21 July 2011 |access-date=12 June 2010}} * {{cite book |last1=Gianni |first1=Matthew |last2=Simpson |first2=Walt |title=The Changing Nature of High Seas Fishing |trans-title=How flags of convenience provide cover for illegal, unreported and unregulated fishing |url=http://assets.panda.org/downloads/iiumr.pdf |access-date=12 June 2010 |date=1 October 2005 |publisher=Australian Department of Agriculture, Fisheries and Forestry, International Transport Workers' Federation, and WWF International}} {{refend}}

===Port state control organisations=== {{refbegin}} * {{cite web |url=http://www.bsmou.org/files.php?file=PDF/ANNUALREPORT2008.pdf |title=Annual Report for 2008 |year=2008 |publisher=Black Sea Memorandum of Understanding on Port State Control |location=Istanbul |archive-url=https://web.archive.org/web/20110725104044/http://www.bsmou.org/files.php?file=PDF%2FANNUALREPORT2008.pdf |archive-date=2011-07-25 |access-date=2010-06-29 |url-status=dead}} * {{cite web |url=http://www.caribbeanmou.org/docs/annual_report_07.pdf |title=Annual Report of the Caribbean Memorandum of Understanding on Port State Control |year=2007 |publisher=Memorandum of Understanding on Port State Control in the Caribbean Region |location=Kingston, Jamaica |access-date=2010-06-29 |archive-url=https://web.archive.org/web/20110725141317/http://www.caribbeanmou.org/docs/annual_report_07.pdf |archive-date=2011-07-25 |url-status=dead}} * {{cite web |url=http://www.iomou.org/php/xmldata/annrep09.pdf |title=Annual Report 2009 |year=2009 |publisher=Indian Ocean Memorandum of Understanding |location=Goa, India |archive-url=https://web.archive.org/web/20110726184633/http://www.iomou.org/php/xmldata/annrep09.pdf |archive-date=2011-07-26 |access-date=2010-06-29 |url-status=dead}} * {{cite web |url=http://81.192.52.75/Med_MoU_Text.html |title=Memorandum of Understanding on Port State Control in the Mediterranean Region |year=2007 |location=Alexandria |archive-url=https://web.archive.org/web/20110706024454/http://81.192.52.75/Med_MoU_Text.html |archive-date=2011-07-06 |access-date=2010-06-29 |url-status=dead}} * {{cite web |url=http://www.parismou.org/upload/anrep/Annual%20Report%202008.pdf |title=Annual Report 2008 |year=2009 |publisher=Secretariat of the Paris Memorandum on Port State Control |location=Paris |trans-title=Port State Control: Making Headway |archive-url=https://web.archive.org/web/20101206103647/http://www.parismou.org/upload/anrep/Annual%20Report%202008.pdf |archive-date=6 December 2010 |access-date=2010-06-29 |url-status=dead}} * {{cite web |url=http://www.tokyo-mou.org/ANN09.pdf |title=Annual Report on Port State Control in the Asia-Pacific Region |year=2010 |publisher=Port State Control Committee of the Memorandum of Understanding on Port State Control in the Asia-Pacific Region (Tokyo MOU) |location=Tokyo |archive-url=https://web.archive.org/web/20110515222940/http://www.tokyo-mou.org/ANN09.pdf |archive-date=2011-05-15 |access-date=2010-06-29 |url-status=dead}} * {{cite web |url=http://200.45.69.62/informes/EN/INFORME_ANUAL_2008.zip |title=Latin American Agreement on Port State Control of Vessels (Acuerdo de Viña del Mar) |publisher=Secretary of the Latin American Agreement on Port State Control |year=2008 |location=Buenos Aires |archive-url=https://web.archive.org/web/20110704042200/http://200.45.69.62/informes/EN/INFORME_ANUAL_2008.zip |archive-date=2011-07-04 |access-date=2010-06-29 |url-status=dead}} * {{cite web |url=http://homeport.uscg.mil/mycg/portal/ep/contentView.do?channelId=-18371&contentId=21904&programId=21428&programPage=%2Fep%2Fprogram%2Feditorial.jsp&pageTypeId=13489&contentType=EDITORIAL |title=Annual Targeted Flag List |publisher=United States Coast Guard |date=29 June 2010 |location=Washington, D.C. |access-date=29 June 2010 |archive-url=https://archive.today/20121212022302/http://homeport.uscg.mil/mycg/portal/ep/contentView.do?channelId=-18371&contentId=21904&programId=21428&programPage=/ep/program/editorial.jsp&pageTypeId=13489&contentType=EDITORIAL |archive-date=12 December 2012 |url-status=dead |df=dmy-all}} {{refend}}

==Further reading== {{refbegin}} * {{cite journal |last1=Alderton |first1=Tony |last2=Winchester |first2=Nik |title=Globalisation and de-regulation in the maritime industry |journal=Marine Policy |volume=26 |issue=1 |pages=35–43 |doi=10.1016/S0308-597X(01)00034-3 |date=January 2002 |bibcode=2002MarPo..26...35A}} * {{cite journal |last1=Alderton |first1=Tony |last2=Winchester |first2=Nik |s2cid=167581548 |title=Regulation, representation and the flag market |journal=Journal for Maritime Research |volume=4 |issue=1 |pages=89–105 |doi=10.1080/21533369.2002.9668323 |date=September 2002}} * {{cite journal |last1=Alderton |first1=Tony |last2=Winchester |first2=Nik |s2cid=153878098 |title=Flag states and safety, 1997–1999 |journal=Maritime Policy and Management |volume=29 |issue=2 |pages=151–162 |doi=10.1080/03088830110090586 |date=April 2002}} *Carlisle, Rodney. (1981). ''Sovereignty for Sale: The Origin and Evolution of the Panamanian and Liberian Flags of Convenience''. Annapolis, MD: Naval Institute Press. {{ISBN|0-87021-668-6}} *Carlisle, Rodney. (2009). Second Registers: Maritime Nations Respond to Flags of Convenience, 1984–1998. ''The Northern Mariner'', 19:3, 319–340. *{{cite news |date=27 May 2000 |title=Bolivia Waves the Flag |newspaper=The Economist |url=http://www.globalpolicy.org/nations/flags.htm}} *{{cite news |last=Toweh |first=Alphonso |date=3 March 2008 |title=Shipping's flag of convenience pays off for Liberia |work=Business Day |publisher=BDFM Publishers (Pty) Ltd. |location=Rosebank, South Africa |archive-url=https://web.archive.org/web/20090226223714/http://www.businessday.co.za/articles/world.aspx?ID=BD4A718723 |archive-date=26 February 2009 |url=http://www.businessday.co.za/articles/world.aspx?ID=BD4A718723 |access-date=13 March 2008}} *{{cite web |url=http://r0.unctad.org/ttl/docs-legal/unc-cml/United%20Nations%20%20Convention%20on%20Conditions%20for%20Registration%20of%20Ships,%201986.pdf |publisher=United Nations |title=United Nations Convention on Conditions for Registration of Ships |date=7 February 1986 |access-date=5 May 2007 |url-status=dead |archive-url=https://web.archive.org/web/20070627020606/http://r0.unctad.org/ttl/docs-legal/unc-cml/United%20Nations%20%20Convention%20on%20Conditions%20for%20Registration%20of%20Ships%2C%201986.pdf |archive-date=27 June 2007}} *{{cite web |url=http://commdocs.house.gov/committees/security/has164220.000/has164220_0.HTM |title=HASC No. 107-42, Vessel Operations Under Flags of Convenience |access-date=4 May 2007 |publisher=United States House Committee on Armed Services |date=13 June 2002}} *{{cite web |url=http://thomas.loc.gov/cgi-bin/cpquery/?&sid=cp106BRzkB&refer=&r_n=sr396.106&db_id=106&item=&sel=TOC_3674& |archive-url=https://archive.today/20121212094309/http://thomas.loc.gov/cgi-bin/cpquery/?&sid=cp106BRzkB&refer=&r_n=sr396.106&db_id=106&item=&sel=TOC_3674& |url-status=dead |archive-date=12 December 2012 |title=Senate Report 106-396 – United States Cruise Vessel Act |access-date=4 May 2007 |publisher=United States Senate |date=6 September 2000}} {{refend}}

==External links==  {{Commons}} *[http://www.ilo.org/dyn/seafarers/seafarersBrowse.Home?p_lang=en Database on reported incidents of abandonment of seafarers] *[http://www.greenpeace.org/international/news/prestige-one-year-on Flag of Convenience Cyprus: Prestige Oil Spill] {{Webarchive|url=https://web.archive.org/web/20090228063228/http://www.greenpeace.org/international/news/prestige-one-year-on |date=28 February 2009 }} *{{cite web |url=http://manilastandardtoday.com/2011/09/10/a-sea-of-trouble/ |author=Cardiente, Christian |author2=Barlaan, Karl Allan |date=2011-09-10 |title=A sea of trouble |url-status=dead |archive-url=https://web.archive.org/web/20130902090021/http://manilastandardtoday.com/2011/09/10/a-sea-of-trouble/ |archive-date=2013-09-02 }}

Category:1920s establishments in the United States Category:1950s neologisms Category:Business terms Category:Flag practices Category:International taxation Category:International trade Category:Law of the sea Category:Offshore finance Category:Offshoring Category:Ship registration *Flag of convenience Category:Illegal, unreported and unregulated fishing