Unions, registry and NGOs clash on flags of convenience

The US Federal Maritime Commission (FMC) is set to rule after 20 August 2025, when the window for comments closes, on whether foreign flag practices constitute “unfavourable shipping conditions” in US foreign trade.

Submissions to date on the investigation show deep divisions between labour unions, registry representatives and policy organisations.

The International Longshore and Warehouse Union said flags of convenience (FoC) undermine “US dockworkers and weaken port communities by driving down shipping standards.” It added the practice is linked to seafarer exploitation, environmental risks and unfair competitive pressure on US labour.

The American Maritime Officers union emphasised what it described as “the national security risks of US reliance on FoC fleets, particularly regarding energy transport.” It said FMC should document how such practices “erode the US merchant marine and threaten strategic sealift readiness.”

The International Transport Workers’ Federation argued flag of convenience vessels are “overrepresented in casualties, detentions, wage theft cases, and abandonment incidents.” The federation said the system directly enabled the ’dark fleet’ used for sanctions evasion, safety and environmental breaches.

The Australian Institute of Marine and Power Engineers said its own national experience demonstrated open registries weaken “training pipelines, wage standards and safety culture.” It warned FMC reliance on FoC vessels undermines a skilled domestic workforce.

The Seafarers’ International Union of Canada provided a structured six-point critique, warning of “unfair competition through regulatory arbitrage, safety risks including counterfeit certificates and substandard maintenance, labour rights violations, environmental evasion, a worsening abandonment crisis and dark fleet vulnerabilities.” The union said 3,133 seafarers were abandoned on FoC ships in 2024, accounting for 80% of all cases.

The Republic of the Marshall Islands (RMI) registry, administered by International Registries Inc, filed a correction request to the FMC notice. It noted the Commission had wrongly linked Dali – the vessel involved in the Francis Scott Key Bridge incident in 2024 – to the RMI. The registry clarified Dali has been Singapore-flagged since 2016.

RMI added it operates “one of the highest-quality fleets in the world,” with detention levels lower than many national registries, and stressed its compliance with international conventions and ownership transparency.

Policy group Global Financial Integrity argued opaque ownership structures linked to flags of convenience “facilitate money laundering, tax evasion and sanctions avoidance.” It called for stricter beneficial ownership disclosure rules and recommended FMC use its authority to examine how foreign flagging affects US commerce.

A legislative submission suggested Congress grant FMC broader powers to address registry practices, saying the Commission should be enabled to act “where such practices result in unfair competition, labour abuse or security risks.”

The comments underline the range of views the Commission must weigh before issuing its decision.

The deadline for submitting comments is 20 August 2025, after which the FMC will determine whether foreign flag practices are creating unfavourable conditions in US foreign trade.

A bipartisan body, FMC is composed of five Commissioners appointed by the President, with one designated as Chairman. There are currently three Commissioners, Rebecca F. Dye, Daniel B. Maffei and Max Vekich, and two vacancies, with no one as yet designated as Chairman.