Maritime Agreements with State Traders
Maritime Agreements with State Traders
Recommended Citation Magnusson, Jon (1971) "Maritime Agreements with State Traders," St. John's Law Review: Vol. 46 : No. 1 , Available at: https://scholarship.law.stjohns.edu/lawreview/vol46/iss1/4
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Article 4
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Article 4.
STATE
TRADERS
JON MAGNUSSON*
INTRODUCTION
Wouldn't it be nice if a perfectly operating open market trading
system were an assured condition for our merchant marine. We hear
the merchant marine is expensive, inefficient and uncompetitive. Under
a well-functioning free enterprise market every ocean carrier would
pursue his business assured that if he were efficient he would be
rewarded; his price would reflect the quality of service; he could make
speedy service changes to meet shippers' needs without asking the
government's permission; he would not have to pay anyone to remove
a threat of injury, but only for services rendered; he would bargain on
terms of relative equality; and, his contract obligations would be
respected and enforced. It would be a world where there were no
penalties on useful service to the public. Our merchant marine would be
efficient and competitive. We know, of course, this ideal condition is
just a utopian dream.
The real world of ocean commerce is not so nice and rosy. On the
contrary, in some parts of the world trade routes are beset by penalties
on useful service. There is gross inequality of bargaining, expensive
payments to avoid commercial injury are necessary, government
restrictions are prerequisites to service changes (in the name of public
interest, of course), quotas are imposed on tonnages or products that
may be carried, governmental price restraints are imposed, and worst of
all there is no assurance of contract enforcement. These conditions seem
to be most prevalent and most penalizing along trade routes where
governments participate directly in ocean transportation by operating
ocean carriers (herein "state traders"), rather than leaving operations
to private citizens. There is a very good reason for these adverse
conditions. The origin of the conditions is the absolute inequality of the
state trader vis-i-vis any private citizen, in competition, in contract
negotiation, and contract enforcement.
UNEQUAL ADVANTAGES OF STATE TRADERS
The inequality between a government and its citizens need not be
belabored, but its consequences when the two try to operate on equal
terms are not so well understood. Antiquity supports the inequality
and we have the following from The FirstBook of the Kings:
And Samuel told all the words of the Lord unto the people that
asked of him a king. And he said, this will be the manner of the
king that shall reign over you: He will take your sons and appoint
them for himself, for his chariots, and to be his horsemen; and some
shall run before his chariots. And he will appoint him captains
over thousands, and captains over fifties; and will set them to make
his instruments of war, and instruments of his chariots. And he
will take your daughters to be confectionaries, and to be cooks and
bakers. And he will take your fields, and your vineyards and your
oliveyards, even the best of them, and given them to his servants.
And he will take the tenth of your seed, and of your vineyards, and
give to his officers, and to his servants.... And ye shall cry out
in that day because of your king which ye shall have chosen you;
and the Lord will not hear you in that day.1
Hobbes concludes the Leviathan with:
And thus I have brought to an end by Discourse of Civil and
Ecclesiastical Government . . . without other design than to set
before men's eyes the mutual relation between protection and
obedience; of which the condition of human nature and the laws
divine, both natural and positive, require an inviolable
observation.2
The unequal relation of subject to sovereign, then, is not open to
question, but the implications are sometimes overlooked and the lessons
ignored.
Before discussing the effect of state traders on our commerce a
few examples from the adjudications of a government agency, the
Federal Maritime Commission3 (Commission), reveal how these
penalties operate in the real world of ocean commerce.
SOME SPECIFIC ExAMPLES
The similarity of the facts provided by cases involving commerce
with two South American nations are good illustrations of what may be
expected from other state trading nations. Venezuela, Brazil and several
other countries in South America use state agencies to transport their
ocean commerce and have promoted their use by different restrictive
practices, but with the same effect.
A.
The Venezuelan Pooling Agreement
Through government agencies Venezuela holds the stock of
Compania Anonima Venezolana de Navigacion (CAVN) an ocean carrier
1Samuel 8: 10-18.
2 1 CoLLuR CLASCS IN THE HISTORY or THouGHTf 511 (1966).
3 Established by Reorganization Plan No. 7 of 1961, ยง 191(a), 75 Stat. 84 (...truncated)