June 22 2011
A cabotage reservation system is in force in Chile under the Merchant Navy Law (Decree Law 3059/79). The law implies that only Chilean vessels are permitted to provide maritime or fluvial transport services (of cargo or passengers) within the national territory or the exclusive economic zone. On exceptional occasions foreign vessels may participate in cabotage when:
At the end of 2010 the transport minister and the Cooperation and Planning Ministry started to put in place the Decree Law 3059/79 modification proposal, in particular Article 3 on the regulation of cabotage. The government aims to broaden cabotage traffic to foreign vessels subject to the following restrictions:
In accordance with the government's principles, this project aims to reduce cabotage transport costs, leading to greater competence in the market and encouraging the transport of goods via maritime transport sources ahead of land transport. This is in harmony with the so-called 2010 Pro-competition Agenda Project, which focuses in part on transport and logistics problems and the optimisation of Chilean competition in relation to its neighbours.
While this proposal is under discussion, local shipping companies have questioned the project as, among other things, it may result in a potential loss of labour sources for Chilean crews and displays an absence of the reciprocity principle in relation to countries that keep their own reserves in cabotage matters. In addition, tax implications may also need to be solved so that a common treatment is granted for both local and foreign carriers.
ILO provides online commentaries as specialist Legal Newsletters. Written in collaboration with over 500 of the world's leading experts and covering more than 100 jurisdictions, it delivers individually requested information via email to an influential global audience of law firm partners and international corporate counsel. Please click here to register for the service.
The materials contained on this website are for general information purposes only and are subject to the disclaimer.
ILO is a premium online legal update service for major companies and law firms worldwide. In-house corporate counsel and other users of legal services, as well as law firm partners, qualify for a free subscription. Register at www.iloinfo.com.