THE CODE AND THE DEVELOPED COUNTRIES.

Developed countries on the convention of the code of conduct are EEC countries,the Scandinavian countries, Eastern European countries, Japan, Australia and the U.S.A. Those countries points of view are fundamentally different from developing countries but they do not have homogeneous position on the code . Their point of view differs accordingly as one deals withthe open maket system or closed market system. This will be developed in two parts :The EEC and Scandinavian countries point of view and the U.S.A. and other countries position.

a) The EIEC and Scandinavian countries point of view.

The ten members of the EEC which are now twelve(w2) adopted a regulation that established specific conditions under which community members must acceed to the code. In essence the regulation accepts the provision of the code for trade between the community and developed countries but opts for a continuation of the status quo for trade between the community and developed countries with reciprocal agreements among developing countries to allow cross trading with each other. The EXIC countries made at least three reservations.

(*l):The groupof 77 is composed of Latin American Asian and African countries.(see page 40).

The first reservation defines national shipping lines in the case of a member state as including any vessel operating shipping lines established on the territory of such a member state in accordance with the EEC treaty. The second reservation rejects the 40 40 20 cargo sharing formula included in article 2 of the code between member states and other OECD countries( ) who are parties to the code. The third reservation excludes the application of article 3 and 14 of the code in conference trade between the EEC members or on a reciprocal basis between these states and OECD members to the code.The remark is that the code is silent on the reservations. Contracting parties on the base of bilateral agreement may decide upon this question.

The Scandinavian countries with the UK, Nether­ lands and Greece have expressed concern that the code may serve as a vehicle to eliminate cross traders. Such ele- mination is possible under a rigid application of the code to adjust the conference position of the trade rather than to all liner trade. The Scandinavian coun­ tries implementing legislation expect to seek to prevent elimination of cross traders.

b) The U.S.A. position and other countries.

Based on its traditional free market principle and on the numerous conflicts between existing in U.S.A. laws and the code, the U.S.A. government's position has been to oppose the code.

Ofl) OECD countries consist of E3EC countries, USA, Japan

An important reason for this position has been and remains the strong anti-trust views of the U.S.A. Most U-.8-.A-. carriers agree that bilateral liner agreement tai­

lored to the requirements of each trade are a preferable course of government action to the ratification of the code . The U.S.A. opposes the code on several grounds more particular because its membership provides for the pooling of cargo and those providing the 40 40 20 formula would in the long run tend to increase costs and reduce the quality of service in a trade : the provision which stipulates for a 15 month rate stability is damaging in the view that the period is unreasonably long. Also in the view of the U.S.A. administration, national lines, are given by the code, unduepower since article 3 provi­ des a veto power in their favour. The conclusion is that the U.S.A.^s opposition to the code arises more from general government policy philosophy which is in favour of free competition and a free enterprise system than those points pointed out above. Japan's position as well as Australia's is almost the same as the position of the U.S.A. It is interesting to point out that among some developing countries, particularly those with a strong free market orientation and those with a well developed merchant marine , engaged in cross trading such as Israel,HongKong,Singapore, there is opposition to the code as in the U.S.A.

However,as far the other countries, such as tho­ se called socialist countries , the position is in favour of the code with some reservations as in the EEC coun­ tries. Many of the communist nations of Eastern Europe, China, and Cuba have acceded to the code with the reser­ vation that exempts joint shipping service agreements

under which most of their liner shipping is conducted. Several South American nations have done likewise. Many of those countries have already achieved a share of 50 percent or more of the liner trade and are not therefore so interested in a 40 percent share .

But what about the position of the L.D.Cs, general called the group of 77 ?