The American flag has very little benefits for cruise lines. There is one cruise ship flagged in the US. She cruises exclusively around Hawaii and has to adhere to US labor laws and taxes. For a ship to be US-flagged they ship must have been built in a US shipyard. The majority of large cruise ships are built in either Italy or Germany, while US shipyards build military and cargo vessels.
The ship also has to pay the US minimum wage and have a certain percentage of US crew members onboard. The history of flying a foreign flag for the purposes mentioned above goes back to the s and the time of prohibition. At the time companies started registering their ships in Panama and many kept this after prohibition ended.
By doing this ship owners started to learn about the benefits of flying a flag of convenience and others around the world started to follow. Many argue that it allows cruise lines to pay staff much less than they otherwise would, avoid taxes, and even commit crimes.
Want to learn how to cruise well on a budget? Start here: How to Cruise For Less. Facebook Group:?? Emma Cruises. For exclusive access to behind the scenes content, join here:?? Emma Cruises Patreon. Weekly newsletter:?? Under international law, every merchant ship must be registered with a country, known as its flag state. That country has jurisdiction over the vessel and is responsible for inspecting that it is safe to sail and to check on the crew's working conditions.
Open registries, sometimes referred to pejoratively as flags of convenience, have been contentious from the start. The first transfer of ships to Panama's register in involved two US passenger ships wishing to serve alcohol to passengers during Prohibition.
More followed as shipowners sought to avoid higher wages and improved working conditions secured through US legislation. After World War Two, Panama's registry grew more rapidly as US shipowners sought to lower overheads while European ones switched flags to avoid high tax rates. As demand rose for open registration, other countries in the developing world formed their own.
By last year, almost three quarters of the world's fleet was registered under a flag of a country other than its own. The registry is lucrative for Panama, bringing in half a billion dollars for the economy in fees, services and taxes.
However, critics of the system point to the ease of hiding the true identity of shipowners and the lax enforcement of rules and regulations. Luis Fruto, representative of the International Transport Workers' Federation ITF in Panama, says the country turns a blind eye to its "responsibilities in order to acquire higher registration". The ITF has led a campaign against flags of convenience since It considers that Panamanian registration is better than some "from a safety viewpoint, but it remains seriously flawed in areas such as oversight, accident investigation and crew assistance".
Two years ago, Mr Fruto investigated the death of a woman sailor, 22, on her first voyage. She became trapped in machinery that was reportedly faulty and died. The ITF says that, rather than heading for the nearest port as rules dictate, the ship continued to sail for more than two weeks with her body in a freezer. Further investigation by the ITF suggested that some of the shipping certificates had been bought.
International legal requirements insist that countries operating open registries inspect vessels, comply with international regulations and investigate accidents and corruption. Most American travelers have multiple options when it comes to securing their rights if something goes wrong with a trip.
You can file complaints with consumer organizations and trade associations. Contact regulatory agencies and attorneys general. And even litigate through the court system though the airline industry's "federal preemption" limits your rights via state and local judiciaries. But when it comes to a cruise industry that does not fly American flags on its ships, addressing problems can be more daunting—and often unsatisfying. Most of the big boats fly Bahamian flags, but other popular registries include Panama, Bermuda, Italy, Malta and the Netherlands.
CLIA maintains there are reasons for such policies: "There are many factors that determine where a cruise ship—or for that matter, any maritime vessel—is flagged.
This can be viewed as a robust free-market debate. Some maintain burdensome U. You can read a detailed analysis of this debate from Caitlin E. Thus, those nations whose open registries have become the most popular also tend to be those who possess the most lax labor, safety and environmental codes.
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