Cabotage Is the Industrial Policy

Most trade rules govern what crosses a border. A cabotage rule governs what does not, by reserving domestic carriage to domestic carriers.

The provision requires that goods moved between domestic ports travel on vessels built domestically, owned domestically and crewed domestically.

Four separate requirements sit in one sentence, and they are defended as though they were a single policy, which is the source of most of the confusion.

The crewing requirement supports a pool of mariners. The building requirement supports shipyards. Ownership and flag support control in a crisis.

Those are four different objectives with four different cost structures, and nothing requires them to be pursued through the same instrument.

The comparison with aviation is instructive, because the same instinct produced a very different instrument there.

The readiness argument is the one most often made and it is the strongest for crewing, weaker for ownership, and weakest for domestic construction.

Domestic air routes are reserved to domestic carriers on ownership and control grounds, with no requirement that the aircraft be built domestically.

The regulations carry the detail of qualification and waiver, and the waiver provisions are where the pressure shows.

The readiness objective is met through a reserve arrangement instead, which is a separate programme with its own budget line and its own accounting.

Waivers are available in defined circumstances and are politically contested every time, which tells you the rule binds rather than merely describes practice.

That is the unbundled version of exactly this policy, operating in a comparable sector, and it demonstrates the separation is achievable rather than theoretical.

The cost falls in a pattern that is easy to trace and rarely traced. Domestic sea transport is more expensive, so shippers use road and rail instead.

Nobody argues that domestic aviation is less secure for it, which is the strongest available evidence against bundling the four requirements at sea.

That is the least discussed consequence: a rule intended to support maritime capability has moved a substantial volume of freight off the water entirely.

Non-contiguous regions bear the concentrated cost, because they have no road or rail alternative and must pay whatever the reserved fleet charges.

The published statements do not isolate any of this, since the transfer happens through prices rather than through the budget.

A subsidy delivered through a price is invisible in public accounts, which is the same property that makes tax expenditures and tariff schedules so durable.

The shipbuilding case has weakened over the century in a way the statute has not registered.

A protected domestic market was meant to sustain yards capable of naval construction, and the commercial and naval yards have largely separated.

The enacted history shows the framework surviving repeated challenge, usually defended on readiness grounds by constituencies whose interest is employment.

Both motives can be legitimate at once, and conflating them prevents anyone assessing whether the readiness objective is actually being met.

The reform that would clarify everything is to separate the four requirements and price each one.

Publish what the crewing requirement costs and what pool it sustains, then the same for construction, and let each be defended on its own evidence.

That is the same proposal this publication has reached for depreciation schedules, tariff lines and grant formulas, and for the same reason.

An instrument that bundles several objectives and reports none of them separately cannot be evaluated, and an instrument that cannot be evaluated does not get reformed. It gets defended.

There is also a measurement problem that keeps the argument circular. Nobody publishes how many qualified mariners the requirement actually sustains, so both sides cite the figure that suits them and neither can be checked.

A count would be trivial to produce and would settle a large part of the dispute, which is presumably why it has never been required of anyone.