Preferential treatment of cargo shipping
Flag discrimination consists of a wide variety of acts and pressures exerted by governments designed to direct cargoes to ships of the national flag, regardless of the commercial considerations which normally govern the routing of cargoes. Restrictions are either imposed on all foreign vessels or discriminate against ships which are registered in certain countries. Flag discrimination thus places impediments in the path of the free flow of international trade, disturbing trade between all countries and all sectors of the economy. Developing countries see the growing use of 'flags of convenience' by shipowners in developed countries as a substantial impediment to their efforts to expand their own merchant fleets.
In 1989, almost 40% of the world shipping fleet of just over 400 million tonnes was under flags which would not have been considered traditional a few decades ago; in particular the growth of the Russian and Chinese merchant fleets, and those of a number of developing countries, such as the Philippines, Brazil, Indonesia and India. However, the major sector of the world fleet is still registered in Liberia, Panama, the Bahamas and Cyprus.