360 
would benefit from conference representation, thereby avoiding 
direct legal confrontation. 
The Soviets have never indicated that they will not join international 
shipping conferences. They are in fact members of several liner con- 
ferences; most of which operate in the foreign to foreign trades. 
They tend to adopt a ‘“‘wait and see”’ attitude in such matters. One 
of the primary reasons why the U.S.S.R. began building up its 
merchant fleet was to reduce the heavy drain on its hard currency 
reserves, and they can be expected to continue to seek to maximize 
earnings from shipping by resorting to competitive rates. The Soviets 
have been exporting diamonds, gold, oil, and other commodities for 
hard currency to cover trade and balance-of-payments deficits with 
the West for domestic economic needs. Another reason why the 
Soviets may be wary of joining shipping conferences can be traced 
to their general reluctance to report trade statistics to a foreign body. 
Moreover, the Soviets do not compile and report statistical information 
in the same manner in which Westerners do. 
In general, the Soviets become less reluctant to join shipping con- 
ferences once they realize that it is clearly in their own best interest. 
They have joined conferences in the past following protests about 
their rate-cutting practices. They tend to be good businessmen and 
if they find that the advantages outweigh the disadvantages of joining 
a conference, they will usually opt to do so.'4 The Soviets maintain 
that they have had to compete for cargoes through rate-cutting and 
other practices. Because of the alleged malpractices engaged in by 
other carriers, the Soviets stress that they have been forced into 
a situation where they have had to resort to these rate-cutting 
methods. There may be some evidence to support this contention 
in that the Soviets recently have filed FAK—freight all kinds—rates 
‘to “remain competitive” with ‘“‘those carriers engaged in malprac- 
tices. 
A related issue that should be considered in the context of any 
discussion about the role of international shipping conferences con- 
cerns UNCTAD’s proposed ‘“‘Code of Conduct for Liner Conferences.” 
_ This code would, in effect, establish rules and procedures to govern 
the activities and operations of the shipping conferences in world 
trades. Two of its chief provisions are also areas of major exception 
taken to the code itself. These are: 
1. The code establishes a cargo-sharing formula where 80 per- 
cent of the ocean commerce would be split evenly between the 
vessels of the national shipping lines at both ends of the trade 
with the remaining 20 percent to be shared by third-flag carriers. | 
An objection to this provision relates to the fact that it would 
tend to constrict world maritime trade by segmenting it into re- 
gional shares. 
2. The code’s rules would regulate carrier participation in the 
liner conferences. This provision could stimulate the formation 
and proliferation of shipping cartels. 
“This position was affirmed by Soviet representatives in informal discussions in 1974 between a 
Commission economist and shipping officials of the Baltic Steamship Co. in Leningrad and represen- 
tatives of Sovinflot in Moscow. Sovinflot acts as the general agent for the 16 Soviet steamship com- 
panies over all matters connected with servicing Soviet ships in foreign ports. 
