Oceans and the Global Economy: Trade, Law, and Environment

Introduction: The Ocean's Role in the Modern Economy

One of the oldest forms of transport is sailing. Long before airplanes or cars were invented, people turned to the sea as a method of moving goods and people from one place to another. Oceans still play a critical role in the modern economy. An estimated one in every six jobs in the United States is in some way tied to the oceans, and "over 1/3rd of the annual U.S. Gross National Product originates in coastal areas — approximately $700 billion… U.S. maritime transport carries 95% of the nation's foreign trade" ("Oceans Impact the Economy" 2015). The importance of ocean-related shipping has increased rather than decreased in recent years, driven by the rise in global trade. Although cheaper and more convenient air travel has reduced the importance of passenger transport by sea, ocean-related cargo trade has continued to grow.

Global Shipping: Growth, Registries, and Key Commodities

The creation of open ship registries "allowed the shipping companies to combine the relatively low capital costs in the industrial countries with the low labour costs for seafarers from developing countries" and to "compensate for sharply rising labour costs, especially in the industrial nations," as well as to avoid equally costly regulations (Bucker et al. 2014: 8.1). The dominance of a handful of top registries has been one noteworthy development. "The ten top open and international registries accounted for about 55 per cent of the global merchant fleet in 2008. In 1950 this figure was only 5 per cent" (Bucker et al. 2014: 8.1). The dominant nations by share of the global fleet include Japan (16.0%), Greece (15.3%), Germany (9.5%), China (8.4%), and Norway (4.5%) (Bucker et al. 2014: 8.1).

Ships have become larger, faster, and more specialized than ever before, which has also driven the rise of sea-based commerce (Bucker et al. 2014: 8.2). One of the most important products transported by sea is crude oil. The price and availability of crude oil affects the global economy in a critical fashion. Crude oil accounts for nearly a quarter of all goods transported by sea, and its transport has a major effect not simply on the market itself but also on the daily lives of consumers who depend on transportation by car and on goods shipped via trucks and other land vehicles powered by oil (Bucker et al. 2014: 8.2).

Coastal Economies, Tourism, and Commerce

In ancient times, ports were a vital driver of civilization. Most of the world's dominant early civilizations were dependent upon nearby bodies of water, including ancient Greece. Even today, cities and hubs of commerce congregate near coastal areas. An estimated "4% of U.S. counties that are adjacent to the coast produce 45% of the nation's gross domestic product (GDP)," and "tourism and recreation account for 70% of the ocean economy's total employment and 34% of its GDP. Offshore mineral extraction accounts for another 37% of the ocean economy's GDP" ("How Important" 2015).

The United States' proximity to oceans is a critical component of its continued economic development and a necessary facet of attracting tourism. "Certain industries, like commercial fishing, obviously depend on the sea" (Narula 2014). Hotels located near ports are also at least partially dependent upon the ocean, and the rise in ocean cruise tourism has become a critical component of tourism economies in many coastal regions.

Conclusion

The oceans remain indispensable to the global economy, international law, and environmental stability. From the dominance of open ship registries and the transport of crude oil to the outsized contribution of coastal counties to national GDP, maritime access shapes economic fortunes at every scale. The development of UNCLOS and the Exclusive Economic Zone framework has brought greater order to the question of ocean governance, yet climate change and rising sea levels pose challenges that existing agreements may not be sufficient to address. The decisions made today by individual states will have lasting material consequences for neighboring nations and the world at large, underscoring the continuing need for robust international cooperation on all matters related to the sea.

References

Bucker, C. et al. (2014). Chapter 1: The earth's climate system. World Ocean Review. Retrieved from http://worldoceanreview.com/en/wor-1/climate-system/earth-climate-system/

Bucker, C. et al. (2014). Chapter 8: Global shipping: A dynamic market. World Ocean Review. Retrieved from http://worldoceanreview.com/en/wor-1/transport/global-shipping/

Bucker, C. et al. (2014). Chapter 10: Law of the sea. World Ocean Review. Retrieved from http://worldoceanreview.com/en/wor-1/law-of-the-sea/a-constitution-for-the-seas/

How important is the ocean to our economy? (2015). Ocean Service. Retrieved from http://oceanservice.noaa.gov/facts/oceaneconomy.html

Narula, S. (2014). America's ocean-powered economy. The Atlantic. Retrieved from http://www.theatlantic.com/business/archive/2014/03/americas-ocean-powered-economy/284516/

Oceans impact the economy. (2015). National Ocean Policy Coalition. Retrieved from http://oceanpolicy.com/about-our-oceans/oceans-impact-the-economy/