Country's usage of international shipping

The most equitable key for the rebate mechanism should relate to a country's usage of international shipping. But is calculating such usage feasible at all?

As is often argued, international shipping provides a service to international trade. Each country therefore could be seen as a user of that service - even land-locked countries. As in any shared service environment, the usage of a service by each user can be calculated, and attributed to each user if required.

A country’s usage of international shipping is closely related to its imports. It can be estimated through a country’s share of global seaborne imports. It is not related to the amount of fuel sold to ships, or the number of ships registered or owned in the country. The recent recession has demonstrated clearly this relationship to imports; lower demand for imports has caused a drop in shipping activity.

As an example, seaborne imports to the United States of America (USA) in 2007 were $1,082 billion. This equates to 13.6% of global seaborne imports of $7.7 trillion in that year.

Thus the USA usage of international shipping is estimated as 13.6%, according to this approach. We also estimate the USA usage of international shipping by a share of unloaded goods by weight, which equals 13.4% in that year. These two estimates are very close.

Data on seaborne imports, country-by-country, is not generally available. However, data on share of global imports by value, country by country, is readily available; for instance from the International Monetary Fund (IMF), and UNCTAD. Thus it could be used to proxy a country’s usage of international shipping, and therefore to estimate a country’s share of cost burden, or tax incidence, from a global MBM. For instance, the USA share of imports by value was 14.2% (UNCTAD).

Given that many developing countries trade mostly by sea and air, using share of imports instead of share of seaborne imports is justified, if a very high degree of accuracy is not required.

For islands, especially remote ones, this is even more so as they only trade by air and sea. However, for countries that trade extensively via other modes of transport, for instance land and pipe, such as the European countries, this approach is less accurate. However, for these countries, there may not be a need to calculate their usage of international shipping country-by-country, as they would not be entitled for rebates. Thus this may not be an issue. If needed however, relevant adjustments could be made as data on transport modal split is generally available for developed countries.

Given that the main objective is to create a practical approach to incorporate the CBDR principle into a global MBM, rather than create a theoretical or perfect regime to attribute shipping emissions to countries, using share of imports may be fully justified.

This is further discussed at the end of the next section, including why we propose using imports by value rather than by volume, or by volume-distance, as well as why and when a share of imports by sea and air is the preferred choice.

The above approach could also potentially be used to proxy the share of international shipping emissions of a particular country and could be included in its national emission accounts, if required.