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Countries around the world especially coastal States establish cabotage laws which apply to merchant ships so as to protect the domestic shipping industry from foreign competition by eliminating or limiting the use of foreign vessels in domestic coastal trade. Coastal States’ deep dependence on the seas and its resources remains integral to their economic wellbeing and survival as nations. Due mainly to the importance of maritime trade and the critical role that coastwise and inland waterway transportation play in nations’ economy, these States had always created cabotage laws aimed at protecting the integrity of their coastal waters, preserving domestically owned shipping infrastructure for national security purposes, ensuring safety in congested territorial waters and protecting their domestic economy by restricting the rights of foreign vessels within their territorial waters. The concept of cabotage has however been broadened lately to include air, railway and road transportations. In view of the forgone disquisition, this paper discussed inter alia the basis on which nations anchor their decisions in determining which form of cabotage policy to adopt. The work also investigated into the likely implications of each cabotage regime on the economy of the States adopting it. This work found out that liberalized/relaxed maritime cabotage is the best form of cabotage for both advanced and growing economies and recommended that States should consider it. The work employed doctrinal and analytical research approaches.
Keywords: Cabotage, State Security, State Economy, Foreign Vessels, Cabotage Regimes