Last week, Carnival Cruise Line announced that it might resume sailing from three U.S. ports for Caribbean itineraries as early as Aug. 1, one week after the expiration of the Centers for Disease Control and Prevention’s “no sail order.” Pre-bookings jumped to twice the level of last year.
Clearly, shutdown-weary travelers are ready to go cruising. But the resumption of sailing should be accompanied by a “new normal” — a rethinking of how we regulate the cruise industry.
Cruise ships operate in a unique, loosely regulated environment that endorses all sorts of questionable practices. What the novel coronavirus has revealed about the cruise industry is a “hidden in plain sight” problem — an international maritime regulatory structure that obfuscates and often ignores legal and social responsibility, accountability and culpability.
In April, ocean cruising came to a complete halt when the CDC issued its “no sail order.” But the order was enforceable only within U.S. territorial waters. While cruise lines successfully negotiated with port authorities to allow ships to dock and debark passengers, crew members were required to remain onboard until arrangements could be made for transportation back to their home countries. By mid-May, approximately 100,000 crew members remained on ships in international waters all around the world: At least 50 of their ships have reported onboard infections. The Cruise Lines International Association (the largest global cruise trade association) responded to the CDC’s strict conditions for debarking crew by saying that they were “impractical.” Passengers and crew members (or their surviving families) have filed lawsuits against several cruise lines.
Until the early 20th century, ships were mostly built, managed, crewed, flagged and operated under the umbrella of their owner’s nationality or one country’s primary ship registry. Between the two world wars and for military, political and economic reasons, the United States began to permit the “flagging out” of its merchant fleet, allowing U.S. ships to fly other countries’ flags. By the 1970s and amid the economic downturn, the practice of flagging out ships gained momentum worldwide as states established offshore international and second registries; essentially creating a “sovereignty for lease” phenomenon. These “flags of convenience” permit states to earn revenue from ship registration fees and tonnage taxes while companies take advantage of tax-free or very lenient taxation, with ship safety, security, health and labor regulations often ignored or nonexistent. A win-win transactional relationship in the name of economic recovery and growth.
The world’s three largest publicly listed cruise corporations are Carnival Corporation & plc incorporated in Panama and England and Wales, Royal Caribbean Cruises Ltd. incorporated in Liberia, and Norwegian Cruise Line Holdings incorporated in Bermuda. Together, these three giants control 75 percent of the global market. Although they are headquartered in Miami, they do not pay U.S. corporate income taxes.
Mega cruise ships can be built in one country, the owner based in another, headquartered in a third country, registered and flagged in a fourth country and possibly managed by a company in a fifth country, while crew members are recruited from all over the world. This maritime structure underwrites a fuzzy distinction between “registered” and “beneficial” owner, and muddies jurisdictional-legal power and accountability. The ship that hosts someone’s next cruise may fly the flag of any one of dozens of nations, placing it under the theoretical jurisdiction of a state with little interest in or capacity to ensure the security and health of passengers, or improve the work conditions for staff who hail from all over the world.
Previous attempts to address seafarers’ work conditions and to ascertain liability for work-related injuries and illnesses have often disappeared into the dark hole of the whens, whys and hows of responsibility. International conventions govern safety, security, health and labor at sea in addition to those preventing pollution from ships. But it is extremely difficult to disentangle and enforce legal responsibility and accountability. The current pandemic-related lawsuits will not likely be an exception to this norm.
Enforcement of cruise ship compliance can fall on port authorities in whatever country the vessel happens to dock. Within U.S. territorial waters, taxpayer-funded agencies such as the U.S. Customs and Border Protection (immigration), U.S. Coast Guard (ship safety) and CDC (health) exert their regulatory powers. But ports in less powerful states and territories (such as those in the Caribbean) simply aren’t able to do so. Local economies have become dependent on passenger spending despite cruise lines’ pay-to-play practices. Some cruise lines have threatened to drop ports from itineraries when confronted with local efforts to raise the “head taxes” they impose on thousands of debarking passengers.
Regulatory reform ought to be part and parcel of the cruise industry’s economic recovery. Stockholders, passengers, crew members and port communities are integral to the cruise industry’s phenomenal growth. But the ugly truth is that they also participate in an international maritime regulatory structure that sidesteps legal accountability. The cruise lines may be in a rush to take to the seas, but expediency is no excuse for abandoning ship on values and social responsibility.
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