DOMESTIC AND REGIONAL COASTAL POLICY
3.1 DEVELOPMENT OF DOMESTIC POLICY (1996 TO 2018)
The period immediately after the first South African democratic elections in 1994 saw significant policy shifts with regard to how maritime transport and coastal shipping in general was perceived. The government consciously moved towards integration of coastal shipping into the broader transport framework to align the maritime industry to government’s wider national building objectives.2
3.1.1 National Transport Policy White Paper (1996)
The first of the government’s efforts to define coastal shipping policy under the new dispensation came with the National Transport Policy White Paper.3 Perhaps to underscore its importance, the National Transport Policy became official policy within two years of the new government assuming power.
However, the National Transport Policy paved the way for the development of transport strategies for all modes of the country’s transportation system and not just for shipping.
It dealt with infrastructure, operation and control of land passenger, land freight transport, civil aviation, maritime transport and road traffic and safety.4 What was significant about this policy was that maritime transport now, unlike before, enjoyed parity with other modes of transport. However, its scope was wide and therefore provided no definitive maritime policy. Nevertheless, the National Transport Policy introduced or at least formalised the idea of freight services as a vehicle for social and economic development.5
2 Prominent policies and frameworks of the time were the Reconstruction and Development Programme (RDP), the Growth, Employment and Redistribution (GEAR) strategy, the Accelerated Shared Growth Initiative of South Africa (ASGISA) and programmes to aide participation in the economy by historically disadvantaged individuals, were all directed at socio-economic development.
3 Referred to hereinafter as the National Transport Policy.
4 See policy statement dealing with “Operation and control”, for instance.
5 The National Transport Policy sought to “Provide safe, reliable, effective, efficient, and fully integrated transport operations and infrastructure which will best meet the needs of freight and passenger customers at improving levels of service and cost in a fashion which supports government strategies for economic and social development whilst being environmentally and economically sustainable”. See “Policy vision”.
With regard to cabotage, the National Transport Policy stated that:
Cabotage options will be monitored in the light of changing international cabotage practices and attitudes. The introduction of cabotage protection legislation on an African continental or Southern African regional basis will be investigated.6
Therefore, the policy does not commit to any specific position with respect to cabotage.
However, the policy was unambiguous about the fact that a legislative framework for cabotage was envisaged and that such framework would consider regional and continental developments.
3.1.2 Draft Maritime Policy (2009 and 2010)
It took over a decade for drafters to deliver a policy document specific to the maritime industry.7 The White Paper on the South African Maritime Policy8 came in two parts.
The first came out in 2009 and was the first draft. It provided impetus for further maritime policy development through stakeholder engagements. The second version, published in 2010, embodied industry comments and amendments to the first draft.
However, there were no remarkable differences between the two versions. Therefore, for convenience, both draft versions have been dealt with as a single draft document.
As expected, general ideals of the National Transport Policy set the tone for the Draft Maritime Policy and were indeed used as a platform for subsequent renditions of a more comprehensive maritime policy. Therefore, the first decade of the 21st century saw great strides being made in the development of the first South African policy document intended to deal exclusively with shipping and related matters.
The Draft Maritime Policy also emphasised regional policy developments and integration. It recognised the importance of the SADC Protocol on Transport, Communication and Meteorology,9 which seeks to harmonise the role of coastal shipping and align regional cabotage practices.10 It is important to note that the SADC Protocol specifically requires its members to progressively remove restrictions on
6 See the section dealing with “The operation of ships”.
7 However, it must be remembered that progress was registered elsewhere. The policy resulted in the promulgation of the South African Maritime Safety Authority Act (SAMSA Act), 5 of 1998 and the revised Ship Registration Act, 58 of 1998, promulgated in the same year.
8 The Draft Maritime Policy.
9 Of 2006; referred to hereinafter as the “SADC Protocol”.
10 Ibid. paragraph 3.3.2.5, 23.
cabotage between SADC member states and commit those, like South Africa, who do not prohibit cabotage by vessels registered in SADC countries to ensure the status quo.11 Therefore, the SADC Protocol unequivocally prohibits cabotage between its members.
The Draft Maritime Policy rightly acknowledged that cabotage developments in South Africa “hold little promise if not sequenced with those of other SADC states or even those that fall under the African Maritime Transport Charter”.12 The Draft Maritime Policy called for cabotage development at sub-regional, regional and continental levels.13 As pointed out earlier, this statement undergirds the discussion in the second part of this chapter regarding the AU Maritime Charter.14
At the heart of the Draft Maritime Policy was the need to re-engineer maritime business by ensuring that the maritime industry, both publicly and privately owned, support the government developmental state approach and its attributes.15 However, although clear on its intentions, the Draft Maritime Policy was not a comprehensive policy. It recognised the need for the development of other policies to deal particularly with cabotage amongst other issues.16 Nevertheless, the relevant policy statements left no doubt that cabotage implementation was among the policy’s foremost priorities alongside the establishment of a home-grown fleet and the establishment of regional corridors.17
3.1.3 Review Report on the South African Maritime Transport Policy (2013) The Review Report on the South African Maritime Transport Policy18 was prepared by the National Maritime Policy Transport Technical Policy Committee consisting of various government departments, SAMSA and the Ports Regulator of South Africa, National Treasury and Transnet. The Maritime Report consolidated the position regarding policy development from the National Transport Policy in 1996 and updated
11 Ibid., read with Article 8.2 of the SADC Protocol, 8/2.
12 Ibid. paragraph 3.3.4.4.
13 Ibid. paragraph 3.12.2.1.
14 The African Maritime Transport Charter is an instrument of AU in which member states resolved to co-operate in all fields of maritime activity and to co-ordinate and harmonise their maritime policies.
Ibid. paragraph 3.12.2
15 Ibid. paragraph 3.17 at 68.
16 The then National Minister of Transport described it in his foreword as “one instalment in policy formulation around the maritime industry and responsibilities” Ibid.
17 Draft Maritime Policy (note 8), 5.
18 Hereinafter referred to as the “Maritime Report”.
it to 2013. The Maritime Policy highlighted and emphasised what government considered crucial for incorporation into what would be a comprehensive maritime policy.
It reiterated the government’s position as a developmental state which then undergirded the urgency with which the state sought the maritime industry’s collaboration to eradicate poverty, inequality and unemployment. Further work on the policy was done on the basis of what it had produced during 2009 and 2010.19 Notably the Maritime Report adopted the stance that the approach to maritime policy required problem identification through research, analysis, and consultation through quantitative and qualitative methods.20 The approach meant policy development would be based on scientific evaluations and would be conducted through stakeholder engagements.
Cabotage would therefore not be handed down to industry as a directive; consultation would be a key feature in its development.
The remainder of what the Maritime Report covered comprised iterations and useful expansions of the Draft Maritime Policy. However, two notable nuances are worthy of mention. First, the Maritime Report categorised trade into four sectors. Second, even more significant, the Maritime Report clearly demarcated interests which policymakers sought to fall under cabotage.
3.1.3.1 Trade categories
The Maritime Report advocated aggregation of trade into coastal, regional, continental and international systems.21 These were then described. A brief delineation (excluding International shipping) is given below in turn.
i Coastal shipping
The coastal system was described as any marine commercial activity conducted along the South African coast, including the carriage of cargo, passengers and equipment on board a ship from one coastal place to another coastal place in the same country.22
19 Maritime Report (note 18), 8 paragraph 1.5.1.2.
20 Ibid. 1.5.3.
21 Ibid. 25.
22 Ibid. 3.8.7.
With regard to cargo, South African vessels must be “mandated … for carrying 100%
of all cargo movement between ports within South African borders” and alternatively on the basis of reciprocity. Such coastal cargo carriage must also conform to the requirement providing for 25.1% preferential access to BBBEE candidates.23
The Maritime Report stated that:
The national maritime interests linked to the transformation of the shipping industry, strategic control of the South African coast, broader maritime security, employment creation and the economic development of the region have to be the overall guiding principles in regard to exercising rights over the country’s coastal trade economy by introducing cabotage regime.24 (Underlined for emphasis.)
The national maritime interest that cabotage should be designed for would protect a wide list of interests that include:
• “Activities of exploration and exploitation or transportation of living and nonliving resources at sea by a South African ship from one port to another one within the Republic
• Carriage of passengers by a South African ship from one port to another within the Republic
• Manning of South African ships, including the training of a sea cadet, in the waters of the Republic”.25
It is important to bear these coastal interests in mind. The discussion relating to the draft legislation on which to implement cabotage (dealt with later) shows a misalignment of these interests.
ii Regional trade
Here, the Maritime Report expands on regional policy development and integration stated in the Draft Maritime Policy. It recognised that South Africa was a member of SADC bound to NEPAD countries and arrangements that requires institutionalised regional development including in relation to coastal shipping. This position in SADC has been formalised by the SADC Protocol, which recognises the strategic importance
23 Ibid. 3.8.16.28, 33.
24 Ibid. 3.8.12.
25 Ibid. 3.8.14.
of the role of coastal shipping. The Maritime Report therefore recommended a SADC Regional Coastal Shipping System that is in line with the AU Maritime Charter and AIMS.26
iii Continental trading
The Maritime Report highlighted Africa’s reliance on “outside” trade and lamented the lack of intra-Africa trade which averages about 10 percent of total trade.27 It called for a coastal shipping system that recognises a Combined Maritime Zone of Africa (commonly referred to as the CEMZA) in line with the AU Maritime Charter. This implied an intention to implement cabotage, as the name suggests, over the entire African coast.
Having consolidated the position of the Draft Maritime Policy and having been more specific on the basis of the maritime policy, work progressed to produce a comprehensive maritime policy. A comprehensive draft came out only in 2015. In the intervening period, government introduced Operation Phakisa in August 2014, which many confused with a maritime policy. Operation Phakisa was a delivery action plan.
It was a strategy intended to fast track implementation of programmes in focus areas.28 It did not deal with coastal shipping.
3.1.4 Green Paper on the South African Maritime Transport Policy (2015) The Green Paper South African Maritime Transport Policy, published in 2015,29 was the first attempt at providing a comprehensive maritime policy. It called for further development of policies including a policy on cabotage30in line with domestic, regional and global imperatives, bearing in mind South Africa’s commitment to SADC and the AU.31 In particular, the Green Paper sought to establish a framework through which to
26 AIMS refers to the Africa’s Integrated Maritime Strategy 2050.
27 Maritime Report (note 18), 32.
28 The focus areas were: Marine Transport and Manufacturing, Offshore Oil and Gas, Aquaculture and Marine Protection Services and Ocean Governance. Refer to Report on Operation Phakisa Implementation (report by State President to media and stakeholders) (13 August 2015).
29 Hereinafter referred to as the “Green Paper”.
30 The Green Paper (note 29) incorrectly defined “cabotage” as the “transport of cargo between the ports of a country in a ship registered in another country”. See definitions vii.
31 Green Paper (note 29) Executive Summary x.
investigate how coastal and regional shipping can be used as a vehicle for economic development and trade facilitation to achieve the ideals of the AU Maritime Charter.32 The Green Paper stated that the main objective was “to ensure a level playing field for South African shipowners and operators against foreign competition and to attract both domestic and foreign investment in the local maritime industry”. Pivotal to this objective was the development of cabotage and related policies. Specific cargo was the target for cabotage, namely sugar, paper and petrochemicals carried by tank containers.33
Furthermore, the Green Paper for the first time made a distinction between genuine coastal services and feeder services. It advocated for the promotion of regional and continental coastal shipping services in a similar way to domestic coastal services. The idea was to promote cabotage to control all African shipping services other than feeder services through bilateral or multilateral agreements with African countries that trade with South Africa.34 These trades would operate on the UNCTAD model of 40:40:20.35 Notably, the Green Paper makes four important points:
• Cabotage and other restrictions are proposed whenever measures to promote a shipping industry in South Africa are under discussion. Such proposals tend to undermine practical proposals that could be implemented to benefit the industry.
• There is not much domestic cargo that could move as cabotage.
• The exclusive use of South African-flagged vessels for cabotage is likely to result in a loss of domestic production to foreign imports, as most of it is locally-produced sugar moving from Durban to Cape Town, and cabotage restrictions could raise the shipping costs sufficiently to render imports less expensive.
• There is no South African-flagged fleet to carry cabotage cargo, particularly if cabotage includes feeder cargo.
32 Ibid.
33 Green Paper (note 29) 27.
34 Ibid. 34.
35 See Policy statement 115.
Where cabotage includes feeder cargo, the cost of “feedering” imports and exports would surely rise, especially because liner companies would in all likelihood divert feedering to elsewhere outside the South African coast.36
Insofar as the objectives of the policy are directed at socio economic upliftment, the above pointed to the counterproductive nature of cabotage implementation. Therefore, government undertook a feasibility study to deal with this and other issues.
3.1.5 Draft Comprehensive Maritime Transport Policy
The proposed Comprehensive Maritime Transport Policy for South Africa, also known as the Maritime Passage of Hope and Development, was published in 2016.37 Perhaps in an effort to cure the defect of its predecessor, the Draft CMTP defined cabotage as a
“trade transit of a foreign vessel along the coast (cabotage trading), from one port to another within the territorial limits of a single nation”. However, the inclusion of
“transit of a foreign vessel” left the definition wanting.
Cabotage definition was further conflated by the definition of “coastal shipping”, which includes “the carriage of cargo by a ship from one place in the Republic … to any other place in the Republic … either directly or through a place outside the Republic … provided that this shall not apply to cargo which is consigned on a through bill of lading to or from a port outside the Republic and is unloaded at a port within the Republic for transshipment purposes only”.
The Draft CMTP called for:
• A statutory framework to regulate coastal shipping through cabotage;
• Registration of vessels on a preferential basis for the creation of a South African fleet to be primarily used for cabotage;
• A licensing regime to regulate coastal cargo carriage and coastal services along the coast on an incentivised basis;
• Such framework to be part of a long-term strategy to promote South African ship ownership to serve national and regional economy.38
36 Green Paper (note 29), 36.
37 Hereinafter referred to as the “Draft CMTP”.
38 Draft CMTP (note 37), 60.
With regard to regional and continental commitments, the Draft CMTP proposed a collaborative approach between South Africa and other regional structures to establish common standards for the alignment of the SADC Protocol and AU Maritime Charter systems with regards to cabotage.
The Draft CMTP released a plan for the establishment of a legislative review and a cabotage framework for a “phased in cabotage restriction” to commence within five years.39
3.1.6 Comprehensive Maritime Transport Policy
The Comprehensive Maritime Transport Policy for South Africa40 was gazetted in June 2017.41 The work that commenced with the National Transport Policy in 1996 finally produced the first South African maritime policy. The CMTP defines itself as that
“component of national policy relating to all forms of transport by sea … concerned with creating the conditions for a safe, secure and stable environment within which all national maritime assets can develop and be utilised for the socio-economic growth and prosperity of the nation whilst being of service to international shipping and trade”.
The CMTP clearly defines cabotage as “trade transit of a vessel along the coast (cabotage trading), from one port to another within the territorial limits of a single nation.” However, cabotage does not apply to cargo discharged in a domestic port for transshipment to ports outside of South Africa.42 Therefore, feeder cargo consigned on a through bill of lading will similarly not form part of cabotage cargo.
Policy statements clearly emphasise the development of a regulatory and legislative framework for cabotage and the introduction of “cabotage restrictions on coastal shipping as part of a long-term strategy to promote South African ship ownership to serve the national and regional economy”.43 It is also envisaged that movement of cargo along the coast will be conducted on the basis of a prescribed licensing regime
39 Ibid. 121.
40 The final policy retained the name “Maritime Passage of Hope and Development” introduced at draft stage. It is referred to hereinafter as the “CMTP”.
41 Government Gazette 40904.
42 CMTP (note 40) 4.
43 Ibid. 48.
which will grant the designated national carrier preferential treatment in the use of port facilities.44
With regard to the region and continent, the CMTP commits South Africa to SADC and the AU Maritime Charter through the Association of Maritime Administrations whose aim is to promote and foster collaboration among African Maritime Authorities on a variety of initiatives including implementation and monitoring African cabotage.45 The schedule to the CMTP shows that the plan is for South Africa to commence phased- in cabotage in 2022.46
3.1.7 Draft Merchant Shipping Act 2018
The Draft Merchant Shipping Act 2018 (Draft MSA) is discussed here as a policy offspring of the CMTP. It proposes various amendments to the Merchant Shipping Act 57 of 1951. This section deals only with the main provisions of the Draft MSA pertinent to cabotage.
The Draft MSA makes it abundantly clear that only South African-owned ships can be involved in cabotage trades. Section 62 states: “No ship, other than a South African- owned ship, is permitted to engage in coastwise traffic”. The definition of “coasting ship” is a “… ship employed in plying between ports in the same country but does not include any fishing vessel …”. In terms of the CMTP such vessel will be engaged in cabotage trade.
Notably, involvement of foreign interests in coastal shipping has not been precluded.
The language used suggests foreign participation on the basis of minority shareholding.47 The trade over which the restriction applies covers all routes and all activities relating to loading and discharge of in the range of ports between Richards Bay and Port Nolloth.
Section 63 proposes licensing of vessels involved in cabotage trade, referred to as
“coastwise traffic”, a term which has been given a corresponding meaning to “coasting ship”. Section 63(1) states:
44 Ibid.
45 Ibid. 23.
46 Ibid. 111.
47 See section 14 of the Draft MSA.