File Photo. Image Credit: Vytautas Kielaitis / Shutterstock.com
International trade union Nautilus International and the Swiss Shipowners Association are urging the Swiss government to take action to preserve the Swiss flag in shipping, rejecting a proposed draft framework agreement that the two organizations says fails to ensure ships register under the Swiss flag.
Despite Switzerland being home to major commodity traders (Glencore and Trafigura) and the world’s largest container shipping company (Mediterranean Shipping Company), the number of ocean-going vessels flying the Swiss flag has drastically decreased to only 14 ships. Making matters worse, these remaining ships are expected to also leave the Swiss flag in the coming years following the expiration of guarantees granted by the government for each ship under the now abolished system, likely resulting in the end of the Swiss flag altogether.
The loss of the Swiss flag would be a significant setback for workers, considering ships under the Swiss flag provide favorable working conditions and comprehensive protection against various maritime hazards such as accidents, piracy, and criminalization, the joint statement said.
The competitiveness of the Swiss flag has decreased over time, with many shipping companies now choosing to “flag shop” offshore flags with lower profit tax rates or registering in flag states that provide advantageous tonnage tax systems.
The opportunity to curb “flag shopping” was within reach when the Organisation for Economic Co-operation and Development (OECD) agreed on a minimum tax of 15% on corporate profits, however, ocean shipping was excluded amid pressure from shipping associations and certain states.
Nautilus International says it regrets the missed opportunity to address global tax dumping in the maritime industry and renews its demand for Switzerland to offer shipping companies more attractive framework conditions, such as a tonnage tax.
While the government is currently planning a tonnage tax, Nautilus and the Swiss Shipowners Association (SSA) have rejecting the current draft as it does not oblige shipping companies to register under the Swiss flag when taking advantage of the tax.
Working together, Nautilus and SSA are emphasizing the need to prevent the commodity trading industry, closely tied to shipping, from exploiting the tonnage tax for booking significant profits.
Nautilus says it remains in close contact with experts and non-governmental organizations (NGOs) and will tie its approval of the tonnage tax to the clear separation between shipping and commodity trading.
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