The forums and conference were to be more European and internationally and/or globally oriented. The forums were designed to set up a conference platform that could be more focused on presenting specific results. This objective was met, and the conference delivered bullet point after bullet point.

Whether or not the organizers ensured a European and international discussion is up for debate. The results and topics at the conference appeared to consider Europe and the international shipping industry, but with a focus on ensuring that Germany could protect or grow its own interests. The only truly international moment was (merely?) bilateral, with the signing of a deep sea mining memorandum of understanding with France (see part III). Otherwise, organizers stressed the “special capacity” of German firms to innovate, and then followed through with this focus by announcing a significant change to Germany’s treatment of non-wage labor costs for domestically-flagged ships.

Although the media fervor leading up to the conference was focused on Chancellor Angela Merkel, who addressed a crowd of around 900 attendees during the first day, the non-wage labor announcement was perhaps the most talked about at the conference itself.

I. Non-wage Labor Costs on German-Flagged Ships

"The states and federal government are unanimous that we need a strong German-flagged shipping sector," Chancellor Merkel said.

German shipowners have called on the government to address what they have called the relatively higher cost of non-wage labor taxes (e.g. pensions, unemployment insurance, social contributions, etc.) under the German flag. The manufacturing equivalent of “flagging out” would be opening a BMW manufacturing plant in Mexico. Many German shipowners have opted to use the cheaper Maltese, Portuguese or Dutch flags, where such non-wage labor costs are negligible. The competitive disadvantage of these taxes has been a troubling factor in the deflagging of German ships and the increasing use of foreign (and chiefly other European) flags to save money. With this change, German shipping is largely freed of taxes; this includes VAT (ordinarily 19%).

We note that the United States of America does not provide rebates on payroll, state and local taxes or federal corporate and income taxes for use of the US flag, although US citizens may under the Merchant Marine Act obtain other subsidies (like a cost differential subsidy for re/construction or reconditioning in US dockyards of US flagged ships engaged in global trading).

The government garnered much applause from shipowners for bringing Germany's rules on non-wage labor costs in line with other European countries.

As written at present, Para. 41(a), Subsec. 4 of the German Income Tax Code allows ship owners (under various conditions) to hold 40% of the non-wage labor costs on German-flagged ships engaged in trade with foreign ports. The modification would change 40% to 100% and add an exemption for wind energy sector ships not engaged in trade with foreign ports. Previously, only fossil fuel mining/exploration ships and, inter alia, tugboats, were exempted.

The “German Shipping Crisis” of the last 2-3 years is, in some ways, a panicked reaction to “flagging out” by some of Germany’s largest shipping companies, for example NSB. In spite of the law change, NSB recently reaffirmed that it will continued deflagging German ships until none of its ships are under the German flag. In the next two years, hundreds of German mariners will lose their jobs.