Under marine laws, every merchant has to be registered with one country. While the United Nations Convention on the High Seas says it would have "a genuine" link with its flag state. This is a "flag of convenience."
That roughly 40% of the global fleet is registered in Panama, Liberia and the Marshall Islands ̵
"Without being too insulting, these "Roe said."
Registration are mostly driven by commercial reasons.
"One way to reduce costs is to choose a flag like Mongolia," Roe said. According to the United Nations Conference on Trade and Development, "It's Got No Coast, No Ports, No Real Direct Relevance to Shipping, It Offers a Flag that's Cheap and Low Standards."
vessels with a total cargo capacity of 664 million tons are sailing under the Mongolian flag.
It works the other way too. Greece, a shipping superpower that owns the largest fleet in the world, is sailing its flag underwater, because shipowners want to avoid Greece's high tax rates.
Having a large flag is prestigious, but also lucrative, which is why countries compete fiercely for ships to register with them.
"It's quite common for shipping companies to shop around for a flag which suits them," said Richard Coles, senior research fellow at the Institute of Maritime Law at the University of Southampton.
Coles, a long-time shipping lawyer, said the term "flag of convenience" is a bit of a derogatory in the shipping industry, because of international conventions, every ship has to comply with common safety and environmental standards.
"Now here is the rub, "Coles said. Caribbean Island, which is a flagship vessel or an American flagged state, which are flag states that rigorously enforce their safety rules. the standards are not likely to be good, "he said.
But the flag decision can have a huge impact on crews. Stena Impero, the Swedish-owned tanker that was seized in Iran last week, which was almost certainly targeted because of flying the British flag.
India, Russia and the Philippines are among the top five countries with the highest numbers of seafarers.
In a conflict situation, security becomes a concern and re-flagging could provide respite.
"For example, during the first Gulf War, quite a few [Kuwaiti] vessels were re-flagged under the UK flag and some were re-flagged under the United States flag in order to gain protection of the those countries," Coles said.
Insurance can play a role too. Lloyd's List, the last week of which the British flag has been issued, has been sold to the United States.  The British-flagged tanker Stena Impero and its 23 crew members were seized by Iran. ” src-mini=”//cdn.cnn.com/cnnnext/dam/assets/190722154745-03-iran-uk-tanker-stena-impero-0721-small-169.jpg” src-xsmall=”//cdn.cnn.com/cnnnext/dam/assets/190722154745-03-iran-uk-tanker-stena-impero-0721-medium-plus-169.jpg” src-small=”http://cdn.cnn.com/cnnnext/dam/assets/190722154745-03-iran-uk-tanker-stena-impero-0721-large-169.jpg” src-medium=”//cdn.cnn.com/cnnnext/dam/assets/190722154745-03-iran-uk-tanker-stena-impero-0721-exlarge-169.jpg” src-large=”//cdn.cnn.com/cnnnext/dam/assets/190722154745-03-iran-uk-tanker-stena-impero-0721-super-169.jpg” src-full16x9=”//cdn.cnn.com/cnnnext/dam/assets/190722154745-03-iran-uk-tanker-stena-impero-0721-full-169.jpg” src-mini1x1=”//cdn.cnn.com/cnnnext/dam/assets/190722154745-03-iran-uk-tanker-stena-impero-0721-small-11.jpg” data-demand-load=”not-loaded” data-eq-pts=”mini: 0, xsmall: 221, small: 308, medium: 461, large: 781″/>